Latvia
According to a substantial revision of the GDP series by Statistics Latvia (largely of the gross investment data for 2022 and 2023), last year was not, in fact, a year of recession. Rather, economic activity actually increased by 1.7% in real terms. We expect to see a more modest upswing of 0.8% in 2024. We anticipate a continued reduction in external demand, although at a slower pace than last year. Significantly, the declining inflation is driving a robust growth in real wages this year. However, household consumption remains subdued. The government has postponed some public investment planned for 2024, and private businesses also remain reluctant to expand further. Owing to the relatively tight labour market, the unemployment rate is expected to rise only slightly in 2024, and will gradually decline over the following two years. Assuming Latvia’s trading partners also recover next year, we expect the economy to pick up, with GDP growth of 2.2% in 2025 and 2.4% in 2026.
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FORECAST* |
| Main Economic Indicators | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
| Population, 1000 persons | 1879 | 1877 | . | . | . | . |
| GDP, real change in % | 1.8 | 1.7 | -0.2 | 2.1 | 2.4 | . |
| GDP per capita (EUR at PPP) | 24960 | 26860 | . | . | . | . |
| Gross industrial production, real change in % | 0.9 | -5.6 | . | . | . | . |
| Unemployment rate - LFS, in %, average | 6.9 | 6.5 | 7.0 | 6.8 | 6.5 | . |
| Average gross monthly wages, EUR | 1373 | 1537 | . | . | . | . |
| Consumer prices, % p.a. | 17.2 | 9.1 | 1.3 | 2.0 | 2.5 | . |
| Fiscal balance in % of GDP | -4.9 | -2.4 | -3.0 | -2.9 | -2.5 | . |
| Public debt in % of GDP | 44.4 | 45.0 | . | . | . | . |
| Current account in % of GDP | -5.5 | -3.9 | -3.3 | -3.6 | -3.2 | . |
| FDI inflow, EUR m | 1174 | 1557 | . | . | . | . |
| Gross external debt in % of GDP | 109.4 | 102.7 | . | . | . | . |
Basic data are continuously updated.
* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.
publication_icon
Monthly Report No. 7-8/2024
Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Meryem Gökten, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2024
45 pages including 5 Tables and 12 Figures
Details
publication_icon
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
According to a substantial revision of the GDP series by Statistics Latvia (largely of the gross investment data for 2022 and 2023), last year was not, in fact, a year of recession. Rather, economic activity actually increased by 1.7% in real terms. We expect to see a more modest upswing of 0.8% in 2024. We anticipate a continued reduction in external demand, although at a slower pace than last year. Significantly, the declining inflation is driving a robust growth in real wages this year. However, household consumption remains subdued. The government has postponed some public investment planned for 2024, and private businesses also remain reluctant to expand further. Owing to the relatively tight labour market, the unemployment rate is expected to rise only slightly in 2024, and will gradually decline over the following two years. Assuming Latvia’s trading partners also recover next year, we expect the economy to pick up, with GDP growth of 2.2% in 2025 and 2.4% in 2026.
