RIGA, March 26 (Reuters) - The Latvian economy is seen shrinking 6.5% this year due to the spread of the new coronavirus and the decline could be even sharper should global efforts to curb the pandemic fail, the country’s central bank said on Thursday.

The Bank of Latvia, whose governor has a seat in the European Central Bank (ECB) Governing Council, also said in a statement to Reuters that inflation was seen running at only 0.5% this year, well below its previous forecast.


In its previous outlook, from December last year, the central bank had saw the Latvian economy expanding 2.6% in 2020 with inflation reaching 2.4%.

“...these forecasts are modeled in a time of great uncertainty and they might be corrected substantially if the global efforts to restrict the spread of the coronavirus do not succeed,” the bank said.

The central bank also said that the measures implemented by the Latvian government would be key to reducing the effects of the crisis.

Latvia, which has confirmed 244 cases of the new coronavirus, has canceled all international flights, shipping, railway and bus traffic until mid-April and banned all public events and gatherings of more than 50 people.

The country’s shopping centres and supermarkets have also been temporarily closed over weekends. (Reporting by Gederts Gelzis; editing by Niklas Pollard)