*  *  *  General economic developments Since 1996 and until the third quarter of 1998 Latvia experienced a period of accelerated economic development. It was characterised by: •  High GDP growth - 8.6% in 1997 and the same level of growth in the first half of 1998. •  Continuously declining inflation - 2.8% at year end 1998.
•  Growth in exports and orientation of trade increasingly towards the European Union (EU). •  This has been a continuous and sustainable trend backed by sound and responsible economic policies of the government. No budget deficit - even a surplus was recorded in 1997 and 1998. Public borrowing in mid-1998 was just around 10% of GDP.