Latvia's economy, the fastest- expanding in the European Union, picked up pace in the second quarter, underscoring concerns that growth may be out of control and the country is heading for a "hard landing", Bloomberg reported

Growth accelerated to an annual 11.3 percent from 11.2 percent in the previous three months, the Riga-based statistics office said on its Web site today. The median estimate of five economists in a Bloomberg survey was for a 10 percent rate.

The former Soviet republic's economy is accelerating at more than three times the pace of the 13 nations that share the euro. The expansion, the ninth consecutive quarter of growth exceeding 10 percent, pushed consumer prices to an annual 9.5 percent in July and prompted Standard & Poor's to cut the country's credit rating, citing an increased risk of a ``hard landing.''

``It's horrifying that domestic demand continues to develop so wildly, while the manufacturing sector has been squeezed out,'' said Lars Christensen, a senior economist at A/S Danske Bank said by phone.

In a bid to slow the highest inflation rate in the EU, which rose to 9.5 percent in July, the government cut fiscal spending, introduced a real-estate tax, and added lending restrictions in March.