Latvia Economic Forecast

Latvia Economic Outlook

May 31, 2022

Economic growth sped up in annual terms in Q1 2022, as less stringent Covid-19 measures led to a strong performance from the services sector. Annual retail sales averaged markedly higher in Q1 compared to Q4, while the unemployment rate dropped to its lowest level since June 2020 in March. That said, subdued activity in the producing sectors capped the overall improvement. Moreover, price pressures have continued to build up since the outset of the year—inflation hit an over 13-year high in April—due to markedly higher food prices, and are only expected to rise further in the near term. In response, Prime Minister Krišjanis Karinš replaced both the Interior and Economics Ministers, aiming for better management of the impacts of the Russian invasion of Ukraine. Nonetheless, the move has been widely criticized as untimely due to the currently spiraling energy crisis.

Latvia Economic Growth

Economic growth is estimated to ease in 2022, in part due to a base effect, elevated inflation and severed ties with Russia—hitherto one of Latvia’s main trade partners. Nevertheless, the ending of Covid-19 restrictions from 1 April, coupled with incoming EU funds, should buttress activity ahead. A potential broadening of the war and a looming energy crisis are key risks. FocusEconomics panelists project GDP to grow 2.2% in 2022, which is down 0.3 percentage points from last month’s forecast, and 2.8% 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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