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Latvia Economy Profile 2019

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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.

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

GDP (official exchange rate)
$30.33 billion (2017 est.)
GDP - real growth rate
4.5% (2017 est.)
2.2% (2016 est.)
3% (2015 est.)
GDP - per capita (PPP)
$27,700 (2017 est.)
$26,200 (2016 est.)
$25,500 (2015 est.)

note: data are in 2017 dollars

Gross national saving
20.7% of GDP (2017 est.)
21% of GDP (2016 est.)
21.8% of GDP (2015 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.)
GDP - composition by sector
agriculture: 3.9% (2017 est.)
industry: 22.4% (2017 est.)
services: 73.7% (2017 est.)
Population below poverty line
25.5% (2015)
Labor force
990,000 (2017 est.)
Labor force - by occupation
agriculture: 7.7%
industry: 24.1%
services: 68.1% (2016 est.)
Unemployment rate
8.7% (2017 est.)
9.6% (2016 est.)
Unemployment, youth ages 15-24
total: 17%
male: 18.3%
female: 15.4% (2017 est.)
Household income or consumption by percentage share
lowest 10%: 2.2%
highest 10%: 26.3% (2015)
Distribution of family income - Gini index
34.5 (2015)
35.4 (2014)
Budget
revenues: 11.39 billion (2017 est.)
expenditures: 11.53 billion (2017 est.)
Taxes and other revenues
37.5% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-0.5% (of GDP) (2017 est.)
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

Inflation rate (consumer prices)
2.9% (2017 est.)
0.1% (2016 est.)
Central bank discount rate
0% (31 December 2017 est.)
0.05% (31 December 2015 est.)
Commercial bank prime lending rate
2.58% (31 December 2017 est.)
2.61% (31 December 2016 est.)
Stock of narrow money
$12.91 billion (31 December 2017 est.)
$10.71 billion (31 December 2016 est.)
Stock of broad money
$12.91 billion (31 December 2017 est.)
$10.71 billion (31 December 2016 est.)
Stock of domestic credit
$17.27 billion (31 December 2017 est.)
$15.11 billion (31 December 2016 est.)
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.)
Agriculture - products
grain, rapeseed, potatoes, vegetables; pork, poultry, milk, eggs; fish
Industries
processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics
Industrial production growth rate
10.6% (2017 est.)
Current Account Balance
-$231 million (2017 est.)
$378 million (2016 est.)
Exports
$12.84 billion (2017 est.)
$11.35 billion (2016 est.)
Exports - commodities
foodstuffs, wood and wood products, metals, machinery and equipment, textiles
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)
Imports
$15.79 billion (2017 est.)
$13.61 billion (2016 est.)
Imports - commodities
machinery and equipment, consumer goods, chemicals, fuels, vehicles
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)
Reserves of foreign exchange and gold
$4.614 billion (31 December 2017 est.)
$3.514 billion (31 December 2016 est.)
Debt - external
$40.02 billion (31 March 2016 est.)
$38.19 billion (31 March 2015 est.)
Stock of direct foreign investment - at home
$18.84 billion (31 December 2017 est.)
$15.36 billion (31 December 2016 est.)
Stock of direct foreign investment - abroad
$3.402 billion (31 December 2017 est.)
$2.485 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.)
Fiscal year
calendar year

Source: CIA World Factbook
This page was last updated on December 7, 2019

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