Sex industry as crisis recovery indicator
So far it’s been a doleful song for Latvia, as the fastest growing economy in the EU just over a year ago has slid to the bottom of the list in the past six months.
It has the highest unemployment after Spain, and its GDP dropped almost 20 per cent, a rate comparable to that of America in the Great Depression.
Even relatively well-off Riga, which keeps afloat thanks to tourists, is bracing itself for one of the harshest winters on record.
“We’re not giving money to people to pay for the rent, for the apartment, but we will be forced to distribute food packages between those who really need it, because it will be the highest priority during the winter," Nil Ushakov, Riga’s mayor, said.
While the country is battling with recession, observers outside Latvia are scanning its shattered economy for some hint of when the global crisis will end.
Matthew Lynn from the Bloomberg agency believes that in hard times, traditional indicators are useless. He suggests alternative benchmarks such as the price of prostitutes. The economist claims the Latvian sex market is the most precise indicator of the health of global trade.
“It’s very flexible. There’s no barrier for people coming here and the price is very flexible. It can change by the hour, by the day. It tells you very, very quickly what the state of demand is. There’s not much money flowing around the system. There’s not much cash there. And that means the economy is getting into trouble,” Matthew Lynn said.
Matthew Lynn's main argument is that since the price for sex services has collapsed by about two-thirds since the start of the crisis, the global economy is still in big trouble. Once the cost of illicit comforts goes up, the world will start recovering. Many though remain skeptical about the new index.
“I wouldn’t say that for any economy that will suit, simply because there’re many countries in the world where prostitutes are not legal and businesses are not transparent at all and then you will never get a valid indicator monitoring their prices even if you manage to,” financial analyst Evgeny Nadorshin said.
Perhaps understandably, many Latvians are not keen that their country should be portrayed in such a red light. But even they admit it isn't over the worst yet.
This autumn is likely to be a testing time for Latvia. The majority of unemployed people will stop receiving welfare support. And if they can't find other sources of income, there's a threat of civil unrest.