Latvia
| FORECAST* | ||||||
|---|---|---|---|---|---|---|
| Main Economic Indicators | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
| Population, 1000 persons | 1879 | 1877 | 1863 | . | . | . |
| GDP, real change in % | 1.8 | 2.9 | -0.4 | 1.5 | 2.1 | 2.3 |
| GDP per capita (EUR at PPP) | 24960 | 27070 | 28110 | . | . | . |
| Gross industrial production, real change in % | 0.9 | -5.3 | -2.0 | . | . | . |
| Unemployment rate - LFS, in %, average | 6.9 | 6.5 | 6.9 | 6.9 | 6.5 | 6.1 |
| Average gross monthly wages, EUR | 1373 | 1537 | 1685 | . | . | . |
| Consumer prices, % p.a. | 17.2 | 9.1 | 1.3 | 3.4 | 2.7 | 2.5 |
| Fiscal balance in % of GDP | -4.9 | -2.4 | -1.8 | -3.2 | -2.9 | -2.6 |
| Public debt in % of GDP | 44.4 | 44.6 | 46.8 | . | . | . |
| Current account in % of GDP | -5.5 | -3.9 | -2.1 | -2.9 | -3.6 | -4.5 |
| FDI inflow, EUR m | 1174 | 1557 | 1191 | . | . | . |
| Gross external debt in % of GDP | 109.4 | 101.9 | 98.9 | . | . | . |
Basic data are continuously updated.
* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.
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Monthly Report No. 7-8/2025
Vasily Astrov, Alexandra Bykova, Selena Duraković, Meryem Gökten, Richard Grieveson, Maciej Grodzicki, Ioannis Gutzianas, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Dzmitry Kruk, Sebastian Leitner, Isilda Mara, Emilia Penkova-Pearson, Olga Pindyuk, Sandor Richter, Marko Sošić, Bernd Christoph Ströhm and Maryna Tverdostup
wiiw Monthly Report No. 7-8, July-August 2025
38 pages including 5 Tables and 3 Figures
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Executive summary
Olga Pindyuk
in: The Crisis is Over, but its Scarring Effects are Hindering Recovery
wiiw Forecast Report No. Spring 2024, April 2024 , pp. I-VII
Details
Latvia’s economy is emerging from stagnation this year; however, demand – both external and internal – is being curbed by the uncertainty caused by recent international developments. Direct exports to the US amount to less than 3% of total Latvian exports. However, given that all of Latvia’s major trading partners are trimming their export forecasts, we expect Latvia’s exporters also to be affected more than previously anticipated. Real incomes are rising quite sharply this year, too, albeit more slowly than in 2024, particularly in the public sector. Although the apparent insecurity is keeping people’s propensity to save for a rainy day high, we will see an upswing in private household demand in 2025, compared to last year. A driver of growth will be the planned (and executed) investment financed by the NextGenerationEU programme. Consumer price inflation is set to increase stronger than expected this year, to an average of 3.4%, on account of rising prices for food and services, as well as higher electricity grid charges. However, a gradual decline in inflation is to be expected in the coming years. In particular the big jump in defence spending will increase the public deficit to 3.2% of GDP in 2025, before it narrows in subsequent years. The unemployment rate is likely to remain stagnant at 6.9% in 2025, but should then decline in the coming years, given the rather tight labour market. Owing to the smaller-than-expected increase in household consumption at the beginning of the year, we have cut our forecast for GDP growth in 2025 to 1.5%. In the medium to long term, GDP growth is projected to pick up again to 2.1% in 2026 and 2.3% in 2027.