Latvia Economic Forecast

Latvia Economic Outlook

December 23, 2021

GDP growth moderated in annual terms in Q3, amid a broad-based slowdown and a less favorable base effect. Turning to the current quarter, high-frequency indicators paint an even less positive picture. Retail sales swung into contraction in October for the first time in eight months, which, coupled with November’s slightly higher unemployment rate and downbeat consumer sentiment, hints at weak private consumption in the quarter. Moreover, harmonized inflation hit its highest level since March 2009 in November, likely weighing further on private spending. Meanwhile, industrial output lost steam in October amid a fall in energy production. On a more positive note, after tougher restrictions led to a marked decline in Covid-19 cases, an uptick in the vaccination rate could help prevent an extension of the state of emergency which should end on 11 January.

Latvia Economic Growth

GDP is set to gain momentum in 2022 as the effects of the pandemic fade and pent-up demand drives growth. Moreover, after recent vaccine mandates bolstered the domestic vaccination campaign, an easing of pandemic-related restrictions should support activity ahead. That said, ongoing tensions with neighboring Belarus and uncertainty over the pandemic weigh on the outlook. FocusEconomics panelists project GDP to grow 4.5% in 2022, which is down 0.1 percentage points from last month’s forecast, and 3.8% in 2023.

Latvia Economy Data

2015 2016 2017 2018 2019
Population (million)
GDP per capita (EUR)12,29912,73413,74315,02415,799
GDP (EUR bn)24.425.126.829.130.5
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-1.2-8.211.315.83.1
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate9.
Fiscal Balance (% of GDP)-1.40.2-0.8-0.8-0.2
Public Debt (% of GDP)37.340.939.337.236.9
Money (annual variation in %)  
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)-1.0-
Policy Interest Rate (%)-  -  -  -  -  
Stock Market (annual variation in %)45.723.535.8-6.711.5
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)-
Current Account Balance (EUR bn)-
Trade Balance (EUR billion)-2.2-1.9-2.2-2.4-2.5
Exports (EUR billion)10.510.511.712.612.6
Imports (EUR billion)12.712.413.915.015.1
Exports (annual variation in %)1.00.610.87.90.2
Imports (annual variation in %)-1.0-2.311.97.51.1
International Reserves (EUR)
External Debt (% of GDP)143149142123116

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Latvia Facts

Value Change Date
Bond Yield0.550.0 %Jun 30
Exchange Rate1.120.65 %Dec 31

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