Latvia Economic Forecast

Latvia Economic Outlook

May 28, 2019

Latvia’s economy encountered significant headwinds at the beginning of this year, following a solid, domestic demand-led expansion at the end of last year. Annual growth plummeted to a two-and-a-half year low in the first quarter, according to preliminary estimates. The deceleration was chiefly driven by a significant downturn in investment activity growth amid feebler dynamics in the construction sector, as well as by near-stagnant industrial production, which was weighed on by contracting electricity, gas and heat supply. Turning to the current quarter, frail dynamics appear to have carried over from Q1. Economic confidence fell to a nine-month low in April, largely due to deteriorating sentiment in the industrial, construction and services sectors, which more than offset higher confidence in the retail trade sector.

Latvia Economic Growth

Growth is seen losing pace this year, largely due to a deceleration in public spending and as fixed investment growth softens amid decelerating inflows of EU-linked cohesion funds. Nevertheless, solid wage growth and sustained consumer optimism should bolster private consumption, while exports are expected to remain resilient to external headwinds. Met the why particular panelists see GDP growing 3.6% in 2019, which is up 0.1 percentage points from last month’s forecast, and 3.2% in 2020.

Latvia Economy Data

Population (million)
GDP per capita (EUR)11,25811,80312,24612,65913,773
GDP (EUR bn)22.823.624.324.926.9
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-6.00.1-0.5-15.016.0
Industrial Production (annual variation in %)-0.9-
Retail Sales (annual variation in %)
Unemployment Rate11.911.
Fiscal Balance (% of GDP)-1.2-1.5-1.40.1-0.5
Public Debt (% of GDP)39.011.936.811.511.1
Money (annual variation in %)8.011.813.97.45.9
Inflation Rate (CPI, annual variation in %, eop)-
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)1.50.4-0.9-2.42.6
Policy Interest Rate (%)
Stock Market (annual variation in %)16.2-11.345.723.535.8
Exchange Rate (vs USD)1.381.
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)-2.7-2.0-0.81.5-0.9
Current Account Balance (EUR bn)-0.6-0.5-0.20.4-0.2
Trade Balance (EUR billion)-2.6-2.4-2.1-1.9-2.6
Exports (EUR billion)
Imports (EUR billion)12.612.712.512.214.0
Exports (annual variation in %)
Imports (annual variation in %)1.00.2-1.3-1.914.5
International Reserves (EUR)
External Debt (% of GDP)134143142148141

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Latvia Facts

Bond Yield0.550.0 %Jun 30
Exchange Rate1.130.65 %Jun 13
Stock Market1,0790.17 %Jun 13

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