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

After a boom in 2022, the effects of dwindling external demand and escalating prices will bring the economy close to stagnation this year (0.3%). Enterprises are largely refraining from investment, preferring to deplete their stocks. Moreover, the ongoing decline in the purchasing power of households will curb growth in consumption. Given the tight labour market, the unemployment rate will rise only slightly in 2023, then decline again next year. Assuming that the EU economy finds its way back on track by the end of 2023, we expect a revival in Latvia’s GDP growth to 2.5% in 2024.