Letònia: Visió econòmica i política
Since its independence, Latvia has implemented market-oriented reforms. The country's economy has performed well due to steady growth in domestic consumption and the contribution of foreign investment. As a member of the EU since 2004 (and of the Eurozone since 2014), it has benefited from substantial European funding. After post-pandemic recovery, Latvia's economy contracted by 0.3% in 2023 due to tighter financial conditions and weak external demand. Real GDP expanded by an estimated 1.7% in 2024 and is projected to gain pace in 2025 (to 2.4%), driven by rising private consumption, public investment, and stronger external demand. Medium-term growth is projected to average 2.5%, supported by investment and reforms (IMF). Investment is expected to rebound in 2025, driven by EU fund inflows and improved financial conditions.
Latvia's macroeconomic indicators are generally positive, as the country pursues tax and labour reforms in accordance with its stability program. The Ministry of Finance reported that Latvia's general government deficit in 2024 was EUR 849.6 million or 2.1% of GDP. According to the Treasury’s operational assessment, general government debt stood at EUR 19 billion or 47.7% of GDP at the end of 2024, an increase of EUR 1.5 billion over the year. The Ministry of Finance attributed this to borrowing measures taken in the previous year to meet financing needs, including covering the budget deficit and public debt obligations. In 2025, the government deficit is expected to rise to 3.2% of GDP, driven by lower tax revenues from labour tax reform, reduced income from state-owned energy and forestry companies, and declining corporate tax payments from the financial sector. The deficit is projected to remain at 3.2% in 2026 due to continued declines in property income, the impact of tax reforms, and moderate growth in government spending. The debt-to-GDP ratio is projected to rise to 50.3% in 2025 and 51.6% in 2026 due to budget deficits and positive stock-flow adjustment (EU Commission). Latvia's annual inflation averaged 1.3% last year, from 9.1% in 2023, thanks to a fast decrease in energy prices (CSB). As energy price base effects diminish, inflation is expected to be 2.2% in both 2025 and 2026 (EU Commission).
In 2024, Latvia's unemployment rate was 6.9%, with 65.3 thousand unemployed people aged 15–74, up by 3.8 thousand (6.2%) from 2023. Unemployment was lower for women (5.8%) than men (8.0%). Youth unemployment stood at 13.6%, the lowest among the Baltic countries for the second year in a row. According to the EU Commission, unemployment should decrease slightly over the forecast horizon due to higher labour demand, while nominal wages are expected to grow by 4% in 2025 and 3.5% in 2026 due to labour market tightness. Latvia has to face a strong emigration of skilled youth and the country has one of the lowest population growth rates in the EU (-0.1% in 2023 - World Bank, latest data available), with birth numbers declining continuously. The latest data published by the Central Statistical Bureau (CSB) show that 21.6% of the country’s population is at risk of poverty. The GDP per capita (PPP) was estimated at USD 43,526 in 2024 by the IMF.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 43.64 | 45.52 | 48.16 | 50.92 | 53.49 |
| GDP (Constant Prices, Annual % Change) | -0.3 | 1.2 | 2.3 | 2.5 | 2.5 |
| GDP per Capita (USD) | 23,176 | 24,223 | 25,681 | 27,203 | 28,632 |
| General Government Balance (in % of GDP) | -2.3 | -2.6 | -2.6 | -2.6 | -2.7 |
| General Government Gross Debt (in % of GDP) | 43.6 | 45.2 | 45.7 | 46.0 | 46.3 |
| Inflation Rate (%) | 9.1 | 1.4 | 2.2 | 2.2 | 2.2 |
| Unemployment Rate (% of the Labour Force) | 6.5 | 6.7 | 6.5 | 6.4 | 6.4 |
| Current Account (billions USD) | -1.75 | -1.71 | -1.76 | -1.76 | -1.78 |
| Current Account (in % of GDP) | -4.0 | -3.8 | -3.6 | -3.5 | -3.3 |
Source: IMF – World Economic Outlook Database, October 2021
The agricultural sector contributes 3.8% of GDP and employs 6.8% of the active population (World Bank, latest data available). It is dominated by cattle breeding and dairy farming, in addition to the production of grain cereals (barley, wheat, rye, and oats), sugar beets, potatoes, and vegetables. Fishing and forestry are also important components of the primary sector. Apart from timber, which is largely exported, Latvia has almost no natural resources. Almost 30% of Latvia’s territory is destined for agricultural use. Since the early 90s, the structure of land management changed significantly, with the liquidation of collective farms in favour of household farms and – to a greater extent - of private farms, which currently dominate the country’s rural sector. According to provisional data from the Central Statistical Bureau, in 2024, Latvia harvested 3.2 million tonnes of grain, 436.4 thousand tonnes (16.1%) more than in 2023. The average cereal yield reached 39.4 quintals per hectare, up 15.5% from the previous year. Winter cereal production increased by 321.4 thousand tonnes (15.3%), totalling 2.4 million tonnes. The value added of the agricultural sector increased by 2.8% y-o-y.
The industrial sector contributes 22.3% of GDP and employs a similar share of the active workforce (22.9%). The construction, metallurgy, industrial food-processing, and mechanical engineering sectors are booming. Latvia is well-known as an important producer of railway equipment, radios, refrigerators, medicines, timber, and steel by-products. The manufacturing sector is estimated to account for 11% of the total GDP. Data published by the CSB show that, in 2024, industrial production decreased by 2.3%. Manufacturing output fell by 2.6%, and electricity and gas supply dropped by 2.7%. However, mining and quarrying saw an increase of 16.6%.
The Latvian economy is driven by the services sector which contributes 61.6% of GDP and employs 70.3% of the active population. Thanks to its attractive fiscal regulation, Latvia has developed a large financial services sector. Transportation and ICT are also important activities for the country’s economy (with more than 6,900 companies operating in the latter sector and a 6% contribution to GDP). Transportation, in particular, contributes nearly 7% of GDP and employs more than 8% of the workforce (official governmental figures). The banking sector comprises 13 banks, including 9 credit institutions registered in Latvia, and four branches of European institutions (European Banking Federation). In 2024, the value added of services increased by 0.4% y-o-y (CSB). Retail trade rose by 0.9%, with non-food products up 2.3%, while food sales fell 1.7%. Wholesale trade and motor vehicle repair grew by 3.8%. Transport and storage declined by 7.9%, except for air transport, which increased by 14.0%. Accommodation services rose by 1.3%, with accommodation up 6.7%, but catering dropped 1.2%. The information and communication sector fell 1.3%, mainly due to declines in computer programming and telecommunications. However, information services grew by 5.0%. Financial and insurance activities grew by 3.1% (CSB).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 6.8 | 22.9 | 70.3 |
| Value Added (in % of GDP) | 3.8 | 22.3 | 61.6 |
| Value Added (Annual % Change) | -8.1 | 5.1 | 2.2 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Actualitzacions: May 2025
