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

The Latvian economy experienced a soft landing in 2019. Growth in gross fixed capital investment and foreign trade has declined substantially and will remain subdued in 2020-2021. A tight labour market will keep wages rising fairly swiftly, which will lead to lively household consumption over the next two years. Export activity is likely to revive slightly this year. Despite the economic slowdown, the labour market is tightening further, with the unemployment rate set to fall to 6.3% this year and in 2021. In 2020, we expect GDP growth to decline further to 2.0%, to be followed by a slight upswing (to 2.4%) in 2021 and on to 2.6% in 2022.