LatviaChapters
Latvia has an open economy that benefits from a good macroeconomic management, a stable banking system, and a growing services and digital sector. The country faces structural challenges, including a shrinking and ageing workforce, skill shortages, and dependence on energy imports. Inflation has been above the eurozone average, while the current account remains in deficit. Geopolitical tensions, particularly with Russia, and domestic political uncertainties also weigh on economic stability. Despite these challenges, Latvia’s economy is expected to recover gradually, supported by rising exports, EU-funded infrastructure projects, and continued investment in high-value sectors.
Source: Coface
Key indicators
- Area
- 64,589 sq km
- Population
- 1,866,124 (2024)
- Government type
- parliamentary democracy
- Languages
- Latvian (official) 56.3%, Russian 33.8%, other 0.6% (includes Polish, Ukrainian, and Belarusian), unspecified 9.4%
- GDP
- $43.68 billion (2024)
- Growth rate
- 0.0% (2024)
- HDI
- 41
- Capital
- Riga
Macroeconomic indicators
Latvia’s economy is expected to grow by 1% of GDP in 2025 after experiencing stagnation in 2024. Despite geopolitical uncertainties, both private and public investments are set to grow strongly. Private consumption is expected to slowly recover in the second half of the year, driven by wage growth, whereas government consumption is projected to be supportive. GDP growth is forecast to pick up to 1.7% in 2026 and to 1.9% in 2027 driven by private consumption, investment and exports. Inflation is set to rebound as the deflationary impact of energy prices fades, while services and food inflation remains strong. Inflation is projected to reach 3.6% in 2025, before falling to 2.2% in 2026 and picking up to 2.4% in 2027. The general government deficit is forecast to increase to 3.1% of GDP in 2025, driven by weaker revenue growth and increasing current expenditure, and further to 4.3% in 2027, mainly due to higher defence expenditure.
Source: European Commission
IMF Statistics:
| Subject descriptor | 2023 | 2024 | 2025 | 2026 | 2027 |
|---|---|---|---|---|---|
|
All Items, Consumer price index (CPI), Period average, percent change Percent (Units) |
9.058 |
1.349 |
3.761 |
2.595 |
2.81 |
|
Current account balance (credit less debit), Percent of GDP Percent (Units) |
-3.838 |
-1.567 |
-2.115 |
-2.305 |
-2.429 |
|
Current account balance (credit less debit), US dollar US dollar (Billions) |
-1.634 |
-0.682 |
-1.013 |
-1.204 |
-1.339 |
|
Exports of goods and services, Volume, Free on board (FOB), Percent change Percent (Units) |
-4.698 |
-1.593 |
2.0 |
2.3 |
2.5 |
|
Gross domestic product (GDP), Constant prices, Percent change Percent (Units) |
2.854 |
-0.442 |
1.028 |
2.164 |
2.354 |
|
Gross domestic product (GDP), Current prices, Per capita, US dollar US dollar (Units) |
22615.109 |
23242.742 |
25629.634 |
28024.242 |
29620.315 |
|
Gross domestic product (GDP), Current prices, US dollar US dollar (Billions) |
42.584 |
43.508 |
47.88 |
52.248 |
55.114 |
|
Imports of goods and services, Volume, Cost insurance freight (CIF), Percent change Percent (Units) |
-1.984 |
-2.344 |
3.4 |
3.1 |
3.3 |
|
Unemployment rate |
6.506 |
6.929 |
6.701 |
6.607 |
6.568 |
Estimates
Source: IMF Statistics - Latvia
Relationships with Luxembourg
Existing conventions and agreements
Non double taxation agreement
In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.
- Convention from 14.06.2004 (Memorial 2006, A No.64, p.1286)
- Effective as of 01.01.2007 (Memorial 2006, A No.64, p.1286)
Air Services agreement
None
Source: Administration des contributions directes
Further information
Foreign Trade
The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.
You can see the statistics on the website of the Statec.
Contact Points in Latvia
Embassy of the Grand Duchy of Warsaw
Ambassador with residence in Warsaw: Ms Peggy FRANTZEN
UI Sloneczna 15
PL-00-789 Warsaw
Poland
Tel.: +48 22 507 86 50
Fax: +48 22 507 86 61
E-Mail: varsovie.amb@mae.etat.lu
Site web: www.varsovie.mae.lu
Honorary Consuls
Riga
Honorary Consul with jurisdiction over Latvia:
Ms Kristiana LIBANE-SKELE
68, rue Dzirnavu (2nd Floor)
LV-1050, Riga
Latvia
Tel.: (+371) 292 192 92
E-Mail: riga@consul-hon.lu
Source: Ducroire Office – Country Risk for Latvia
Country risk as defined by Office du Ducroire for Latvia
Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.
Link: ODL - Latvia