After contracting substantially between 1991 and 1995, the economy steadied in late 1994, led by a recovery in light industry and a boom in commerce and finance. This recovery was interrupted twice, first by a banking crisis and the bankruptcy of Banka Baltija, Latvia's largest bank, in 1995 and second by a severe crisis in the financial system of neighbouring Russia in 1998. After 2000, Latvian GDP grew by 6–8% a year for 4 consecutive years. Latvia's state budget was balanced in 1997 but the 1998 Russian financial crisis resulted in large deficits, which were reduced from 4% of GDP in 1999 to 1.8% in 2003. These deficits were smaller than in most of the other countries joining the European Union in 2004.
AftEr contRActing sUbStantiAlLy BetWEEn 1991 and 1995, thE EcOnOMy steadieD IN lAtE 1994, LEd By a rECOvery iN LIgHt industRy anD A Boom In cOMmERcE and fINanCe. thIS rEcovery waS iNterrupteD twIce, First by a banKIng criSIs and tHe bANkrUPtCy Of bAnka balTiJA, latviA's largest Bank, IN 1995 And sEconD by a seVerE crisis iN the finanCiaL sysTem oF neighboUrINg rUssia In 1998. aftEr 2000, latViaN gdp GRew by 6–8% a year foR 4 cONsecuTive YeARs. Latvia's sTAtE Budget was baLaNced in 1997 but thE 1998 russian financial cRisiS resUltEd iN LArge defiCits, which were rEDUced From 4% of gdp In 1999 tO 1.8% in 2003. TheSE dEfIcitS WerE SmalLeR thAn in MosT Of THe otheR CoUntrIeS joINing tHe euROpean unioN iN 2004.