ECONOMICS

Main Crops: Wheat, corn, sorghum, soybean, sugar beets.

Natural Resources: Lead, Zinc, Tin, Copper, Iron, Petroleum.

Major Industries: Food Processing, Motor Vehicles, Consumer Durables.

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.

 

 

	1990	2000	2010	2020
GNI, Atlas method (current US$) (billions)	..	7.86	26.54	34.01
GNI per capita, Atlas method (current US$)	..	3,320	12,650	17,900
GNI, PPP (current international $) (billions)	..	19.01	37.51	59.82
GNI per capita, PPP (current international $)	..	8,030	17,880	31,470
GDP (current US$) (billions)	..	7.96	23.96	33.65
GDP growth (annual %)	..	5.7	-4.5	-3.8
Inflation, GDP deflator (annual %)	..	3.6	-0.3	-0.1
Agriculture, forestry, and fishing, value added (% of GDP)	..	4	4	4
Industry (including construction), value added (% of GDP)	..	24	20	19
Exports of goods and services (% of GDP)	..	37	53	60
Imports of goods and services (% of GDP)	..	45	55	59
Gross capital formation (% of GDP)	..	24	20	22
Revenue, excluding grants (% of GDP)	..	39.1	38	42.8
Net lending (+) / net borrowing (-) (% of GDP)	..	-3.5	-11.7	-6.4
States and markets
Time required to start a business (days)	..	16	16	6
Domestic credit provided by financial sector (% of GDP)	..	..	..	..
Tax revenue (% of GDP)	..	20.7	19.7	22.4
Military expenditure (% of GDP)	0.7	0.9	1.1	2.3
Mobile cellular subscriptions (per 100 people)	0	16.8	108.8	108.8
Individuals using the Internet (% of population)	0	6.3	68.4	88.9
High-technology exports (% of manufactured exports)	..	..	8	20
Statistical Capacity Score (Overall Average) (scale 0 - 100)	..	..	..	..
Global links
Merchandise trade (% of GDP)	..	64	89	103
Net barter terms of trade index (2000 = 100)	..	100	106	109
External debt stocks, total (DOD, current US$) (millions)	..	..	..	..
Total debt service (% of exports of goods, services and primary income)	..	..	..	..
Net migration (thousands)	-116	-72	-83	-74
Personal remittances, received (current US$) (millions)	..	252	1,257	1,088
Foreign direct investment, net inflows (BoP, current US$) (millions)	31	324	475	944
Net official development assistance received (current US$) (millions)	..	..	..	..