Latvia Economic Forecast

Latvia Economic Outlook

October 27, 2020

Following the sharpest GDP contraction since the 2009-10 global financial crisis in Q2 as a result of the Covid-19 blow, recent data hints at a recovery that is losing traction. After a slight rebound in July, industrial production slumped again in August as manufacturing output faltered. Moreover, retail sales growth waned again in the same month, which, combined with a still-elevated, despite gradually falling, unemployment rate and deeply entrenched pessimism among consumers in Q3, bodes ill for private consumption. The surge in new virus infections from mid-September onwards may come to further restrain spending heading into Q4. On a positive note, Fitch Ratings affirmed the country’s credit rating at A- and lifted its outlook from negative to stable on 9 October, citing the economy’s relative resilience to the pandemic’s shock and the government’s favorable financing conditions.

Latvia Economic Growth

The Covid-19 outbreak and associated containment measures will pummel activity this year. Next year, however, output is expected to rebound in line with a recovery in domestic spending and external demand. That said, key risks to the outlook still abound, particularly the latest resurgence of infections, which may prompt a reinstatement of restrictions. FocusEconomics panelists project GDP to grow 4.6% in 2021, which is down 0.2 percentage points from last month’s forecasts, and 3.6% in 2022.

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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