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	1,883,000 (2023)[3]
GDP	$40 billion (nominal, 2022 est.)[4] 70 billion (PPP, 2022 est.)[4]
GDP rank	106th (nominal, 2022) 100nd (PPP, 2022)
GDP growth	4.3% (2018) 2.2% (2019) −3.6% (2020) 5.2% (2021e)[4]
GDP per capita	$25,100 (nominal, 2023 est.)[4] $37,300 (PPP, 2022 est.)[4]
GDP per capita rank	48rd (nominal, 2022) 49th (PPP, 2022)
GDP by sector	agriculture: 3.9% industry: 22.4% services: 73.7% (2017 est.)[5]
Inflation (CPI)	0.6% (2020 est.)[4] 2.7% (2019)[4] 2.6% (2018)[4]
Population below poverty line	25.5% (2015)[5] 27.3% at risk of poverty or social exclusion (AROPE, 2019)[6]
Gini coefficient	35.2 medium (2019, Eurostat)[7]
Human Development Index	0.879 very high (2022)[8] (37th) 0.802 very high (33rd) (2022)[8]
Labour force	974,318 (2019)[9] 76.8% employment rate (Target: 73%; 2018)[10]
Labour force by occupation	agriculture: 7.7% industry: 24.1% services: 68.1% (2016 est.)[5]
Unemployment	8.8% (August 2020)[11] 17.6% youth unemployment (15 to 24 year-olds; July 2020)[12]
Average gross salary	€1,525 monthly (August, 2023)
Average net salary	€1,114 monthly (August, 2023)
Main industries	processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics
External
Exports	$12.84 billion (2017 est.)[5]
Export goods	foodstuffs, wood and wood products, metals, machinery and equipment, textiles
Main export partners	Lithuania(+) 15.8%  Russia(+) 14%  Estonia(+) 10.9%  Germany(+) 6.9%  Sweden(+) 5.7  United Kingdom(+) 4.9%  Poland(+) 4.3%  Denmark(+) 4.1% (2017)[5]
Imports	$15.79 billion (2017 est.)[5]
Import goods	machinery and equipment, consumer goods, chemicals, fuels, vehicles
Main import 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)[5]
FDI stock	$18.84 billion (31 December 2017 est.)[5] Abroad: $3.402 billion (31 December 2017 est.)[5]
Current account	−$231 million (2017 est.)[5]
Gross external debt	$40.02 billion (31 March 2016 est.)[5]
Public finances
Government debt	36.9% of GDP (2019)[13] €11.245 billion (2019)[13]
Budget balance	€63 million deficit (2019)[13] −0.2% of GDP (2019)[13]
Revenues	38.7% of GDP (2019)[13]
Expenses	38.9% of GDP (2019)[13]
Economic aid	€4.6 billion from European Structural and Investment Funds (2007–2013)[14] €5.63 billion from European Structural and Investment Funds (2014–2020)[15]
Credit rating	Standard & Poor's:[16] A− (Domestic) A− (Foreign) AAA (T&C Assessment) Outlook: Stable[17] Moody's: A3 Outlook: Stable[18] Fitch: A− Outlook: Stable[19] Scope: A− Outlook: Stable[20]
Foreign reserves	$4.614 billion (31 December 2017 est.)[5]
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,^[21] a member of the European Union since 2004, a member of the Eurozone since 2014 and a member of the OECD since 2016.^[22] Latvia is ranked the 14th in the world by the Ease of Doing Business Index prepared by the World Bank Group.^[23] According to the Human Development Report 2011, Latvia belongs to the group of very high human development countries.^[24] 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,^[25] 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%^[26] and thus Latvia again was among the fastest growing economies in the European Union. The IMF/EU program successfully concluded in December 2011.^[27]

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.