Latvia’s government resigned Friday after weeks of chaos due to the country’s economic collapse. President Valdis Zatlers said he had accepted the resignation of Prime Minister Ivars Godmanis and his administration. Zatlers said he would begin talks with party leaders Monday to find a new candidate for premier.

This is the second European government, after Iceland to face such drastic governement changes due to the international financial crisis.

Latvia’s economic collapse comes as strong as it’s previous growth. GDP contract by 10.5 percent in January at an annual rate, compared with levels a year earlier. By the end of 2009, Latvia’s economy is projected to shrink by an overwhelming 12 percent, according to Finance Ministry officials. Several analysts even believe that these figures may wishful thinking.

Unemployment figures are another nightmare scenario in Latvia, with predictions set around 50% unemployement by the end of 2009. The Baltic nation secured a $2.35 billion support loan from the International Monetary Fund in December.

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