The Latvian National Development Plan foresees increasing the share of manufacturing in the Latvian GDP to 20 percent in three years, but this target is unrealistic, Economics Minister Arvils Aseradens said.

In an interview with the Dienas Bizness business daily, he said the structure of the Latvian economy had to be changed in the long term while regaining trust of foreign investors which had significantly dwindled in the last two years was an objective to be attained in the short term.

"Seeing the current share of manufacturing in GDP (12.2 percent), it is impossible to raise it to 20 percent in three years. The problem of our manufacturers is low competitiveness, namely, productivity," the minister said.

At present the productivity in the Latvian manufacturing industry in current prices is at 35 percent of the EU level.

"Huge efforts will have to be made not only by the companies but also by the public administration to make Latvian manufacturing competitive on the global scale, and then we could start speaking about adequate share of manufacturing in GDP," Aseradens said.

When asked whether that meant that the National Development Plan had to be revised, the minister answered that Latvia had to admit that the 20 percent target was unrealistic and adjust the plan accordingly.

"We have to replace it with a different target -- an increase in manufacturing productivity. The government's objective to achieve a faster economic growth (5 percent) cannot be fulfilled without increasing productivity," said the minister.

According to the minister, overall productivity in Latvia is at 41-42 percent of the EU average, and in the last eight years the country has not made progress in improving productivity.

"If we failed to find a way to change the economic structure, to switch to products and services with higher value added, to improve efficiency in production and the public administration, meeting the government's targets will be difficult," the economics minister said. Endit

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