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Latvia vs. Belarus

Economy

LatviaBelarus
Economy - 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.

As part of the former Soviet Union, Belarus had a relatively well-developed industrial base, but it is now outdated, inefficient, and dependent on subsidized Russian energy and preferential access to Russian markets. The country’s agricultural base is largely dependent on government subsidies. Following the collapse of the Soviet Union, an initial burst of economic reforms included privatization of state enterprises, creation of private property rights, and the acceptance of private entrepreneurship, but by 1994 the reform effort dissipated. About 80% of industry remains in state hands, and foreign investment has virtually disappeared. Several businesses have been renationalized. State-owned entities account for 70-75% of GDP, and state banks make up 75% of the banking sector.

Economic output declined for several years following the break-up of the Soviet Union, but revived in the mid-2000s. Belarus has only small reserves of crude oil and imports crude oil and natural gas from Russia at subsidized, below market, prices. Belarus derives export revenue by refining Russian crude and selling it at market prices. Russia and Belarus have had serious disagreements over prices and quantities for Russian energy. Beginning in early 2016, Russia claimed Belarus began accumulating debt – reaching $740 million by April 2017 – for paying below the agreed price for Russian natural gas and Russia cut back its export of crude oil as a result of the debt. In April 2017, Belarus agreed to pay its gas debt and Russia restored the flow of crude.

New non-Russian foreign investment has been limited in recent years, largely because of an unfavorable financial climate. In 2011, a financial crisis lead to a nearly three-fold devaluation of the Belarusian ruble. The Belarusian economy has continued to struggle under the weight of high external debt servicing payments and a trade deficit. In mid-December 2014, the devaluation of the Russian ruble triggered a near 40% devaluation of the Belarusian ruble.

Belarus’s economy stagnated between 2012 and 2016, widening productivity and income gaps between Belarus and neighboring countries. Budget revenues dropped because of falling global prices on key Belarusian export commodities. Since 2015, the Belarusian government has tightened its macro-economic policies, allowed more flexibility to its exchange rate, taken some steps towards price liberalization, and reduced subsidized government lending to state-owned enterprises. Belarus returned to modest growth in 2017, largely driven by improvement of external conditions and Belarus issued sovereign debt for the first time since 2011, which provided the country with badly-needed liquidity, and issued $600 million worth of Eurobonds in February 2018, predominantly to US and British investors.

GDP (purchasing power parity)
$54.02 billion (2017 est.)
$51.67 billion (2016 est.)
$50.55 billion (2015 est.)

note: data are in 2017 dollars

$179.4 billion (2017 est.)
$175.1 billion (2016 est.)
$179.7 billion (2015 est.)

note: data are in 2017 dollars

GDP - real growth rate
2.08% (2019 est.)
4.2% (2018 est.)
3.23% (2017 est.)
1.22% (2019 est.)
3.17% (2018 est.)
2.53% (2017 est.)
GDP - per capita (PPP)
$27,700 (2017 est.)
$26,200 (2016 est.)
$25,500 (2015 est.)

note: data are in 2017 dollars

$18,900 (2017 est.)
$18,400 (2016 est.)
$19,000 (2015 est.)

note: data are in 2017 dollars

GDP - composition by sector
agriculture: 3.9% (2017 est.)
industry: 22.4% (2017 est.)
services: 73.7% (2017 est.)
agriculture: 8.1% (2017 est.)
industry: 40.8% (2017 est.)
services: 51.1% (2017 est.)
Population below poverty line
25.5% (2015)
5.7% (2016 est.)
Household income or consumption by percentage share
lowest 10%: 2.2%
highest 10%: 26.3% (2015)
lowest 10%: 3.8%
highest 10%: 21.9% (2008)
Inflation rate (consumer prices)
2.9% (2017 est.)
0.1% (2016 est.)
6% (2017 est.)
11.8% (2016 est.)
Labor force
885,000 (2020 est.)
4.381 million (2016 est.)
Labor force - by occupation
agriculture: 7.7%
industry: 24.1%
services: 68.1% (2016 est.)
agriculture: 9.7%
industry: 23.4%
services: 66.8% (2015 est.)
Unemployment rate
6.14% (2019 est.)
6.51% (2018 est.)
0.8% (2017 est.)
1% (2016 est.)

note: official registered unemployed; large number of underemployed workers

Distribution of family income - Gini index
34.5 (2015)
35.4 (2014)
26.5 (2011)
21.7 (1998)
Budget
revenues: 11.39 billion (2017 est.)
expenditures: 11.53 billion (2017 est.)
revenues: 22.15 billion (2017 est.)
expenditures: 20.57 billion (2017 est.)
Industries
processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics
metal-cutting machine tools, tractors, trucks, earthmovers, motorcycles, synthetic fibers, fertilizer, textiles, refrigerators, washing machines and other household appliances
Industrial production growth rate
10.6% (2017 est.)
5.6% (2017 est.)
Agriculture - products
grain, rapeseed, potatoes, vegetables; pork, poultry, milk, eggs; fish
grain, potatoes, vegetables, sugar beets, flax; beef, milk
Exports
$12.84 billion (2017 est.)
$11.35 billion (2016 est.)
$28.65 billion (2017 est.)
$22.98 billion (2016 est.)
Exports - commodities
foodstuffs, wood and wood products, metals, machinery and equipment, textiles
machinery and equipment, mineral products, chemicals, metals, textiles, foodstuffs
Exports - partners
Lithuania 15.8%, Russia 14%, Estonia 10.9%, Germany 6.9%, Sweden 5.7%, UK 4.9%, Poland 4.3%, Denmark 4.1% (2017)
Russia 43.9%, Ukraine 11.5%, UK 8.2% (2017)
Imports
$15.79 billion (2017 est.)
$13.61 billion (2016 est.)
$31.58 billion (2017 est.)
$25.61 billion (2016 est.)
Imports - commodities
machinery and equipment, consumer goods, chemicals, fuels, vehicles
mineral products, machinery and equipment, chemicals, foodstuffs, metals
Imports - partners
Lithuania 17.6%, Germany 11.7%, Poland 8.7%, Estonia 7.6%, Russia 7.1%, Netherlands 4.2%, Finland 4.2%, Italy 4% (2017)
Russia 57.2%, China 8%, Germany 5.1% (2017)
Debt - external
$40.02 billion (31 March 2016 est.)
$38.19 billion (31 March 2015 est.)
$39.92 billion (31 December 2017 est.)
$37.74 billion (31 December 2016 est.)
Exchange rates
euros (EUR) per US dollar -
0.885 (2017 est.)
0.903 (2016 est.)
0.9214 (2015 est.)
0.885 (2014 est.)
0.7634 (2013 est.)
Belarusian rubles (BYB/BYR) per US dollar -
1.9 (2017 est.)
2 (2016 est.)
2 (2015 est.)
15,926 (2014 est.)
10,224.1 (2013 est.)
Fiscal year
calendar year
calendar year
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

53.4% of GDP (2017 est.)
53.5% of GDP (2016 est.)
Reserves of foreign exchange and gold
$4.614 billion (31 December 2017 est.)
$3.514 billion (31 December 2016 est.)
$7.315 billion (31 December 2017 est.)
$4.927 billion (31 December 2016 est.)
Current Account Balance
-$222 million (2019 est.)
-$99 million (2018 est.)
-$931 million (2017 est.)
-$1.669 billion (2016 est.)
GDP (official exchange rate)
$30.33 billion (2017 est.)
$54.44 billion (2017 est.)
Stock of direct foreign investment - at home
$18.84 billion (31 December 2017 est.)
$15.36 billion (31 December 2016 est.)
$6.929 billion (31 December 2016 est.)
$7.241 billion (31 December 2015)
Stock of direct foreign investment - abroad
$3.402 billion (31 December 2017 est.)
$2.485 billion (31 December 2016 est.)
$3.547 billion (31 December 2016 est.)
$4.649 billion (31 December 2015)
Market value of publicly traded shares
$6.76 billion (31 December 2016 est.)
$6.799 billion (31 December 2015 est.)
$7.127 billion (31 December 2014 est.)

NA

Central bank discount rate
0% (31 December 2017 est.)
0.05% (31 December 2015 est.)
14% (19 April 2017)
15% (15 March 2017)
Commercial bank prime lending rate
2.58% (31 December 2017 est.)
2.61% (31 December 2016 est.)
9.66% (31 December 2017 est.)
14.4% (31 December 2016 est.)
Stock of domestic credit
$17.27 billion (31 December 2017 est.)
$15.11 billion (31 December 2016 est.)
$19.81 billion (31 December 2017 est.)
$20.65 billion (31 December 2016 est.)
Stock of narrow money
$12.91 billion (31 December 2017 est.)
$10.71 billion (31 December 2016 est.)
$3.702 billion (31 December 2017 est.)
$2.719 billion (31 December 2016 est.)
Stock of broad money
$12.91 billion (31 December 2017 est.)
$10.71 billion (31 December 2016 est.)
$3.702 billion (31 December 2017 est.)
$2.719 billion (31 December 2016 est.)
Taxes and other revenues
37.5% (of GDP) (2017 est.)
40.7% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-0.5% (of GDP) (2017 est.)
2.9% (of GDP) (2017 est.)
Unemployment, youth ages 15-24
total: 12.2%
male: 12.5%
female: 11.8% (2018 est.)
total: 10.6%
male: 12.7%
female: 8.4% (2018 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.)
household consumption: 54.8% (2017 est.)
government consumption: 14.6% (2017 est.)
investment in fixed capital: 24.9% (2017 est.)
investment in inventories: 5.7% (2017 est.)
exports of goods and services: 67% (2017 est.)
imports of goods and services: -67% (2017 est.)
Gross national saving
20.7% of GDP (2017 est.)
21% of GDP (2016 est.)
21.8% of GDP (2015 est.)
24.5% of GDP (2017 est.)
23% of GDP (2016 est.)
25.8% of GDP (2015 est.)

Source: CIA Factbook