Austerity lesson from Latvia

An 84 year old plywood factory in Latvia. Some say it's the kind of success story which EU policymakers dream about a they face an economic crisis. In 2009 after a sales slumped; 15 percent of the workforce was fired. Those who stayed on saw salaries cut and work hours slashed. Now the company has more than 2,000 workers and is doing better than in its pre-crisis days.

(SOUNDBITE) (English) PRIME MINISTER VALDIS DOMBROVSKIS, SAYING:

"There is this debate about growth versus austerity. Latvia is a country in the EU 27 that has done most about austerity and is currently the fastest growing EU economy."

Latvia, known as one of the "Baltic Tigers" before 2007, saw its economy plummet 18 percent in 2009. Last year it grew by 5.5 percent, and is up 6.9 percent in the first quarter of the year.

(SOUNDBITE) (English) SWEDBANK'S CHIEF ECONOMIST IN LATVIA, MARTINS KAZAKS, SAYING:

"Greeks can learn a lot from Latvians and many other countries can learn a lot from Latvians, from Baltic countries as such. But that doesn't mean it can be repeated."

Unemployment is still high in Latvia, at around 16 percent. But overall there is a cautious mood of optimism.

Deborah Lutterbeck, Reuters