Economy of Latvia

Economy of Latvia

Riga with its Central Market in the view
Currency	Euro (EUR, €)
Fiscal year	Calendar year
Trade organisations	EU, OECD and WTO
Country group	Developed/Advanced[1] High-income economy[2]
Statistics
Population	1,861,900 (2024)[3]
GDP	$45.04 billion (nominal, 2024)[4] $77.69 billion (PPP, 2024)[4]
GDP rank	97th (nominal, 2024) 107th (PPP, 2024)
GDP growth	2.6% (2019)[5] -2.3% (2020)[5] 4.3% (2021)[5] 2.8% (2022)[5] -0.3% (2023)[6] 1.7% (2024f)[6] 2.4% (2025f)[6]
GDP per capita	$24,193 (nominal, 2024)[4] $41,730 (PPP, 2024)[4]
GDP per capita rank	44th (nominal, 2024) 50th (PPP, 2024)
GDP by sector	agriculture: 3.9% industry: 22.4% services: 73.7% (2017 est.)[7]
Inflation (CPI)	2.7% (2019)[8] 0.1% (2020)[8] 3.2% (2021)[8] 17.2% (2022)[8] 9.1% (2023)[8] 2.0% (2024f)[8] 3.6% (2025f)[8]
Population below poverty line	22.5% (2021 est.)[7] 25.6% at risk of poverty or social exclusion (AROPE, 2023)[9]
Gini coefficient	34.0 medium (2023)[10]
Human Development Index	0.879 very high (2022)[11] (37th) 0.802 very high (33rd) (2022)[11]
Corruption Perceptions Index	60 out of 100 points (2023)[12] (36th)
Labour force	977,523 (2023)[13] 77.5% employment rate (2023)[14]
Labour force by occupation	agriculture: 7.7% industry: 24.1% services: 68.1% (2016 est.)[7]
Unemployment	7.2% (April 2024)[15] 11.9% youth unemployment (15 to 24 year-olds; April 2024)[16]
Average gross salary	€1,671 monthly (2024)
Average net salary	€1,213 monthly (2024)
Main industries	processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics
External
Exports	$20.73 billion (2023)[17]
Export goods	foodstuffs, wood and wood products, metals, machinery and equipment, textiles
Main export partners	Lithuania(+) 18%  Estonia(+) 10%  Germany(+) 6%  Russia(+) 6%  Sweden(+) 5% (2022)[7]
Imports	$25.49 billion (2023)[18]
Import goods	machinery and equipment, consumer goods, chemicals, fuels, vehicles
Main import partners	Lithuania(+) 22%  Estonia(+) 10%  Germany(+) 9%  Poland(+) 9%  Russia(+) 6% (2022)[7]
FDI stock	$25.91 billion (2023)[19] Abroad: $3.402 billion (31 December 2017 est.)[7]
Current account	−$1.732 billion (2024)[20]
Gross external debt	$40.83 billion (April 2024)[21]
Public finances
Government debt	43.8% of GDP (2024)[22] €19.90 billion (2024)[23]
Budget balance	€1.3 billion deficit (2024)[24] −2.9% of GDP (2024)[24]
Revenues	37.8% of GDP (2024)[25]
Expenses	40.8% of GDP (2024)[26]
Economic aid	€4.6 billion from European Structural and Investment Funds (2007–2013)[27] €5.63 billion from European Structural and Investment Funds (2014–2020)[28]
Credit rating	Standard & Poor's:[29] A (Domestic) A (Foreign) AAA (T&C Assessment) Outlook: Stable[30] Moody's: A3 Outlook: Stable[31] Fitch: A− Outlook: Positive[32] Scope: A− Outlook: Stable[33]
Foreign reserves	$4.46 billion (2022 est.)[7]
All values, unless otherwise stated, are in US dollars.

The economy of Latvia is an open economy in Europe and is part of the European Single Market. Latvia is a member of the World Trade Organization (WTO) since 1999,^[34] a member of the European Union since 2004, a member of the Eurozone since 2014 and a member of the OECD since 2016.^[35] Latvia is ranked the 14th in the world by the Ease of Doing Business Index prepared by the World Bank Group.^[36] According to the Human Development Report 2023/24 by the United Nations Development Programme, has a HDI score of a 0.879 (2022 data).^[37] 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 electronic devices.

Latvia's economy has had rapid GDP growth of more than 10% per year during 2006–07, but entered a severe recession in 2009 as a result of an unsustainable current account deficit, collapse of the real estate market, and large debt exposure amid the softening world economy. Triggered by the collapse of Parex Bank, the second largest bank, GDP decreased by almost 18% in 2009,^[38] and the European Union, the International Monetary Fund, 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. In 2011 Latvia achieved GDP growth by 5.5%^[39] and thus Latvia again was among the fastest growing economies in the European Union. The IMF/EU program successfully concluded in December 2011.^[40]

Privatization is mostly complete, except for some of the large state-owned utilities. Export growth contributed to the economic recovery, however, the bulk of the country's economic activity is in the services sector.