Latvia Economy - 2021


SOURCE: 2021 CIA WORLD FACTBOOK

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Economic overview

Latvia is a small, open economy with exports contributing more than half of GDP. Due to its geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronics industries. Corruption continues to be an impediment to attracting foreign direct investment and Latvia's low birth rate and decreasing population are major challenges to its long-term economic vitality.

Latvia's economy experienced GDP growth of more than 10% per year during 2006-07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the slowing world economy. Triggered by the collapse of the second largest bank, GDP plunged by more than 14% in 2009 and, despite strong growth since 2011, the economy took until 2017 return to pre-crisis levels in real terms. Strong investment and consumption, the latter stoked by rising wages, helped the economy grow by more than 4% in 2017, while inflation rose to 3%. Continued gains in competitiveness and investment will be key to maintaining economic growth, especially in light of unfavorable demographic trends, including the emigration of skilled workers, and one of the highest levels of income inequality in the EU.

In the wake of the 2008-09 crisis, the IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro in exchange for the government's commitment to stringent austerity measures. The IMF/EU program successfully concluded in December 2011, although, the austerity measures imposed large social costs. The majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises, including 80% ownership of the Latvian national airline. Latvia officially joined the World Trade Organization in February 1999 and the EU in May 2004. Latvia also joined the euro zone in 2014 and the OECD in 2016.

Real GDP growth rate

2.08% (2019 est.)

4.2% (2018 est.)

3.23% (2017 est.)

country comparison to the world: 133

Inflation rate (consumer prices)

2.8% (2019 est.)

2.5% (2018 est.)

2.9% (2017 est.)

country comparison to the world: 143

Credit ratings

Fitch rating: A- (2014)

Moody's rating: A3 (2015)

Standard & Poors rating: A+ (2020)

Real GDP (purchasing power parity)

$59.102 billion (2019 est.)

$57.912 billion (2018 est.)

$55.672 billion (2017 est.)

note: data are in 2010 dollars

country comparison to the world: 108

GDP (official exchange rate)

$34.084 billion (2019 est.)

Real GDP per capita

$30,898 (2019 est.)

$30,050 (2018 est.)

$28,664 (2017 est.)

note: data are in 2010 dollars

country comparison to the world: 67

Gross national saving

21.7% of GDP (2019 est.)

23.5% of GDP (2018 est.)

23.4% of GDP (2017 est.)

country comparison to the world: 95

GDP - composition, by sector of origin

agriculture: 3.9% (2017 est.)

industry: 22.4% (2017 est.)

services: 73.7% (2017 est.)

GDP - composition, by end use

household consumption: 61.8% (2017 est.)

government consumption: 18.2% (2017 est.)

investment in fixed capital: 19.9% (2017 est.)

investment in inventories: 1.5% (2017 est.)

exports of goods and services: 60.6% (2017 est.)

imports of goods and services: -61.9% (2017 est.)

Ease of Doing Business Index scores

Overall score: 80.3 (2020)

Starting a Business score: 94.1 (2020)

Trading score: 95.3 (2020)

Enforcement score: 73.5 (2020)

Agricultural products

wheat, milk, rapeseed, barley, oats, potatoes, rye, beans, pork, poultry

Industries

processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics

Industrial production growth rate

10.6% (2017 est.)

country comparison to the world: 12

Labor force

885,000 (2020 est.)

country comparison to the world: 142

Labor force - by occupation

agriculture: 7.7%

industry: 24.1%

services: 68.1% (2016 est.)

Unemployment rate

6.14% (2019 est.)

6.51% (2018 est.)

country comparison to the world: 100

Population below poverty line

22.9% (2018 est.)

Gini Index coefficient - distribution of family income

35.6 (2017 est.)

35.4 (2014)

country comparison to the world: 101

Household income or consumption by percentage share

lowest 10%: 2.2%

highest 10%: 26.3% (2015)

Budget

revenues: 11.39 billion (2017 est.)

expenditures: 11.53 billion (2017 est.)

Taxes and other revenues

37.5% (of GDP) (2017 est.)

country comparison to the world: 54

Budget surplus (+) or deficit (-)

-0.5% (of GDP) (2017 est.)

country comparison to the world: 62

Public debt

36.3% of GDP (2017 est.)

37.4% of GDP (2016 est.)

note: data cover general government debt, and includes debt instruments issued (or owned) by government entities, including sub-sectors of central government, state government, local government, and social security funds

country comparison to the world: 147

Fiscal year

calendar year

Current account balance

-$222 million (2019 est.)

-$99 million (2018 est.)

country comparison to the world: 102

Exports

$20.444 billion (2019 est.)

$20.007 billion (2018 est.)

$19.153 billion (2017 est.)

country comparison to the world: 80

Exports - partners

Lithuania 16%, Estonia 10%, Russia 9%, Germany 7%, Sweden 6%, United Kingdom 6% (2019)

Exports - commodities

lumber, broadcasting equipment, whiskey and other hard liquors, wheat, packaged medicines (2019)

Imports

$22.049 billion (2019 est.)

$21.397 billion (2018 est.)

$20.096 billion (2017 est.)

country comparison to the world: 78

Imports - partners

Russia 21%, Lithuania 14%, Germany 9%, Poland 7%, Estonia 7% (2019)

Imports - commodities

refined petroleum, broadcasting equipment, cars, packaged medicines, aircraft (2019)

Reserves of foreign exchange and gold

$4.614 billion (31 December 2017 est.)

$3.514 billion (31 December 2016 est.)

country comparison to the world: 97

Debt - external

$40.164 billion (2019 est.)

$42.488 billion (2018 est.)

country comparison to the world: 75

Exchange rates

euros (EUR) per US dollar -

0.82771 (2020 est.)

0.90338 (2019 est.)

0.87789 (2018 est.)

0.885 (2014 est.)

0.7634 (2013 est.)

NOTE: The information regarding Latvia on this page is re-published from the 2021 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Latvia 2021 information contained here. All suggestions for corrections of any errors about Latvia 2021 should be addressed to the CIA or the source cited on each page.

This page was last modified 16 Dec 23, Copyright © 2023 ITA all rights reserved.