Latvia skyline

Latvia Economic Data & Projections

Latvia Economic Outlook

A small, open economy:

Latvia, with a GDP of around $40 billion, is a small but dynamic economy in the Baltic region. As a member of the eurozone, Latvia benefits from trade and investment ties with the EU, particularly with its Nordic neighbors. However, economic growth has slowed in recent years due to inflationary pressures, weak exports, and the impact of Russia’s war in Ukraine. Latvia has worked to diversify its economy, but it remains vulnerable to external shocks.

Key industries and trade partners:

Latvia’s economy is largely export-driven, with key industries including logistics, timber, and manufacturing. The country has a well-developed financial services sector and is an important transit hub between Europe and Asia. However, the loss of trade with Russia—previously a key economic partner—has forced Latvia to realign its trade ties toward the EU and Nordic countries. The IT sector has also seen strong growth, positioning Latvia as an emerging hub for digital services.

Challenges:

Latvia faces several challenges, including a declining population, labor shortages, and high inflation. Inflation reached double digits in 2022, squeezing household incomes and slowing consumption. The country also struggles with income inequality and a relatively high debt-to-GDP ratio compared to other Baltic states. Additionally, structural reforms are needed to boost productivity and attract more investment.

Latvia’s economic outlook:

The Latvian economy is expected to grow at a moderate pace, driven by EU funding, digital transformation, and increased trade with Western Europe. However, risks remain, particularly related to inflation, demographic decline, and energy security. Investments in infrastructure and innovation will be crucial for sustaining long-term competitiveness.

Latvia's Macroeconomic Analysis:

Nominal GDP of USD 42.2 billion in 2023.

GDP per capita of USD 22,435 compared to the global average of USD 10,589.

Average real GDP growth of 2.4% over the last decade.

Share of the region's population
Share of the region's GDP

Sector Analysis

In 2021, services accounted for 76% of overall GDP, manufacturing 12%, other industrial activity 8%, and agriculture 4%. Looking at GDP by expenditure, private consumption accounted for 55% of GDP in 2021, government consumption 20%, fixed investment 27%, and net exports -2%.

GDP by economic sector
GDP by type of expenditure

International trade

In 2021, manufactured products made up 59% of total merchandise exports, mineral fuels 6%, food 18%, ores and metals 3% and agricultural raw materials 13%, with other categories accounting for 1% of the total. In the same period, manufactured products made up 67% of total merchandise imports, mineral fuels 9%, food 15%, ores and metals 2% and agricultural raw materials 4%, with other goods accounting for 3% of the total. Total exports were worth USD 22 billion in 2022, while total imports were USD 26 billion.

Key exports
Key imports
Key export partners
Key import partners

Main Economic Indicators

Economic growth

The economy recorded average annual growth of 2.4% in the decade to 2023. To read more about GDP growth in Latvia, go to our dedicated page.

Fiscal policy

Latvia's fiscal deficit averaged 2.3% of GDP in the decade to 2023. Find out more on our dedicated page.

Unemployment

The unemployment rate averaged 8.1% in the decade to 2024. For more information on Latvia's unemployment click here.

Inflation

Inflation averaged 3.7% in the decade to 2024. Go to our Latvia inflation page for extra insight.

Monetary Policy

Euro Area monetary policy rate ended 2024 at 3.15%, up from 0.05% a decade earlier. See our Latvia monetary policy page for additional details.

Exchange Rate

From end-2014 to end-2024 the euro weakened by 20% vs the U.S. dollar. For more info on the euro, click here.

Economic situation in Latvia

The economy contracted more deeply year on year in Q3 than in Q2 due to a decline in domestic demand. Turning to Q4, GDP likely returned to growth. In October–December, retail sales growth accelerated from Q3 and economic sentiment averaged above the prior quarter’s level. Less positively, industrial output and goods exports swung into decline in October–November, and average inflation exceeded Q3’s level. In Q1 2025, our Consensus is for annual GDP growth to remain near Q4’s projected rate, with the ECB’s interest rate cuts providing impetus. In other news, a fiber-optic undersea cable connecting Latvia and Sweden was heavily damaged in late January in the latest string of incidents in the Baltic Sea. Suspicions of Russian sabotage prompted NATO to heighten its presence in the area. Tensions in the region will persist this year as Baltic states decouple from Russia’s energy grid.

Latvia Economic Forecasts

Projections out to 2034.

48 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 15 expert analysts.

Want to get insight on the economic outlook for Latvia in the coming years? FocusEconomics collects projections out to 2034 on 48 economic indicators for Latvia from a panel of 15 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Latvia economy. To download a sample report on the Latvia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.

Latvia Economic Indicators

2019 2020 2021 2022 2023
Inflation (CPI, ann. var. %, eop) 2.3 -0.5 7.8 20.9 0.6
Merchandise Trade Balance (EUR bn) -2.6 -1.6 -2.8 -4.1 -3.6
Stock Market (var. of OMXR %) 10.7 10.4 12.1 -9.5 15.9
Unemployment (% of active population, aop) 6.3 8.1 7.5 6.8 6.5
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 2.50 4.50
Government Consumption (ann. var. %) 5.6 3.9 3.7 2.4 7.0
Private Consumption (ann. var. %) -0.1 -4.8 8.1 5.1 -1.0
Current Account Balance (EUR bn) -0.1 0.9 -1.3 -2.0 -1.5
Merchandise Exports (EUR bn) 12.8 13.5 16.2 20.7 18.7
Current Account Balance (% of GDP) -0.2 3.0 -4.1 -5.5 -3.9
Merchandise Exports (ann. var. %) 1.6 5.4 20.6 27.7 -9.9
GDP (EUR bn) 29.6 29.2 32.3 36.1 39.1
Domestic Demand (ann. var. %) 2.3 -4.0 10.7 1.0 3.5
Money (ann. var. of M2 %) 8.0 13.1 7.9 6.4 2.3
GDP per capita (USD) 17,237 17,461 20,161 20,229 22,435
Fiscal Balance (% of GDP) -0.2 -4.1 -7.2 -4.9 -2.4
GDP (USD bn) 33.1 33.3 38.2 37.9 42.2
10-Year Bond Yield (%, eop) 0.16 -0.29 0.30 3.50 3.49
Exchange Rate (USD per EUR, eop) 1.12 1.22 1.14 1.07 1.10
Wages (ann. var. %) 7.2 6.2 11.8 7.5 11.9
GDP per capita (EUR) 15,399 15,317 17,055 19,245 20,750
Imports (G&S, ann. var. %) 2.0 -1.1 15.1 9.9 -2.0
Economic Growth (GDP, ann. var. %) 0.7 -3.5 6.9 1.8 1.7
Exports (G&S, ann. var. %) -0.6 -0.3 9.1 11.4 -4.7
Economic Growth (Nominal GDP, ann. var. %) 5.0 -1.2 10.5 11.8 8.2
Merchandise Imports (EUR bn) 15.4 15.0 19.0 24.8 22.3
Merchandise Imports (ann. var. %) 1.9 -2.5 26.5 30.8 -10.2
Inflation (HICP, ann. var. %, eop) 2.1 -0.5 7.9 20.7 0.9
Inflation (HICP, ann. var. %, aop) 2.7 0.1 3.2 17.2 9.1
Industrial Production (ann. var. %) 0.8 -1.8 6.5 0.8 -4.8
Fixed Investment (ann. var. %) 1.3 -2.4 6.8 -1.6 9.9
Retail Sales (ann. var. %) 2.3 1.5 -3.5 3.1 -2.2
Population (million) 1.9 1.9 1.9 1.9 1.9
Inflation (PPI, ann. var. %, aop) 1.9 -1.9 13.1 30.7 1.1
Exchange Rate (USD per EUR, aop) 1.12 1.14 1.18 1.05 1.08
3-Month EURIBOR (%, eop) -0.38 -0.55 -0.57 2.13 3.91
Public Debt (% of GDP) 37.9 44.0 45.9 44.4 45.0
Foreign Direct Investment (EUR bn) 0.8 0.8 2.9 1.3 1.1
ECB Overnight Deposit Rate (%, eop) -0.50 -0.50 -0.50 2.00 4.00
Free Sample Report

Interested in Latvia economic reports, analysis and data? FocusEconomics provides data, forecasts and analysis for hundreds of countries and commodities. Request your free sample report now.

Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen