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Remember Latvia? It's on track for the euro.

The Latvian economy is recovering, and they've done it without devaluing the currency – which means Latvia may soon become a euro country.

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Ints Kalnins / Reuters / File
People attend a celebration of the Assumption of the Virgin Mary in Aglona, Latvia, on August 15. More than 60,000 worshipers from Latvia, Lithuania, Poland and Belarus assembled for the event this year.

Remember Latvia? Before the attention turned to Greece, Latvia was portrayed as the country with the biggest crisis (partly unfairly).

But now the Latvian economy shows clear signs of recovery, with retail sales in August increasing by 1% compared to the previous month and 4.6% compared to August 2009. And industrial production increased 3.5% compared to the previous month and 20.5% compared to August 2009.

While output is still significantly below pre-crisis levels and unemployment still far too high, Latvia's economy is clearly in a recovery. This recovery comes "despite" the fact that Latvia hasn't devalued and implemented tough but necessary austerity measures.

Meanwhile, the government that pushed through the tough these austerity measures was re-elected with a wide margin.

Both of these news will help Latvia bring down the budget deficit and thereby qualify it for entry into the euro area.

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