WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

While 2023 ended with GDP declining slightly (0.3%), this year will see an upswing of 1.6%. We expect external demand to shrink further, but by less than last year. Lower inflation will result in real wages rising – and accordingly in growth in household consumption. The government plans to further increase public investment in 2024, though private business remains reluctant to expand further. Given the still rather tight labour market, the unemployment rate fell slightly in 2023 – and will do so even more in the coming two years. Assuming that Latvia’s trading partners also find their way back on track next year, we expect the economy to pick up, with GDP growth of 2.5% in 2025 and 2.7% in 2026.