Latvia Economic Forecast

Latvia Economic Outlook

October 22, 2019

Momentum appears to have remained muted in the third quarter, after faltering investment activity and a deteriorating external backdrop led growth to a near three-year low in the second quarter. Industrial production lost traction in July–August on tumbling mining and quarrying output, and near-stagnant manufacturing sector activity. On a more positive note, consumer demand appears to have held up in July–August, reflected by stronger retail sales growth amid a falling unemployment rate. Externally, merchandise exports dipped in August, suggesting that July’s rebound was likely just a one-off. Meanwhile, economic sentiment, on average, remained broadly stable from the previous quarter in Q3. In other news, on 20 September, Fitch Ratings affirmed the country’s A credit rating with a stable outlook, largely thanks to expected policy continuity and a narrowing fiscal deficit.

Latvia Economic Growth

Growth is seen stable next year, supported by solid domestic demand. Private consumption should spearhead the overall expansion, amid a tighter labor market and lower inflation; investment activity is set to remain upbeat; and the external sector should remain vigorous, despite the challenging external environment. FocusEconomics panelists see GDP growing 2.8% in 2020, which is down 0.1 percentage points from last month’s forecast, and 3.0% in 2021.

Latvia Economy Data

Population (million)
GDP per capita (EUR)11,25811,80312,24612,71613,863
GDP (EUR bn)22.823.624.325.027.0
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-6.00.1-0.5-8.413.1
Industrial Production (annual variation in %)-0.9-
Retail Sales (annual variation in %)
Unemployment Rate11.910.
Fiscal Balance (% of GDP)-1.2-1.4-1.40.1-0.6
Public Debt (% of GDP)39.440.936.840.340.0
Money (annual variation in %)8.011.813.97.45.9
Inflation Rate (CPI, annual variation in %, eop)-
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)1.50.4-0.9-2.42.6
Policy Interest Rate (%)0.25-  -  -  -  
Stock Market (annual variation in %)16.2-11.345.723.535.8
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)-2.7-1.7-
Current Account Balance (EUR bn)-0.6-0.4-
Trade Balance (EUR billion)-2.6-2.5-2.2-1.9-2.5
Exports (EUR billion)10.010.410.510.511.6
Imports (EUR billion)12.612.912.712.414.2
Exports (annual variation in %)
Imports (annual variation in %)1.02.2-1.5-2.314.2
International Reserves (EUR)
External Debt (% of GDP)134143144149141

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Latvia Facts

Bond Yield0.550.0 %Jun 30
Exchange Rate1.100.65 %Sep 04
Stock Market1,0250.17 %Sep 04

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