LATVIA


Geographically, it is the middle one of the three Baltic republics, which were a part of the former Soviet Union; next to the Baltic Sea, borders with Estonia, Russia, Belarus and Lithuania

Total area: 64,589 sq km (slightly larger than West Virginia)
Population:  2.05 million
Government type: Parliamentary democracy
Administrative division: 110 municipalities (called „novads“) and 9 republic cities
Capital + other major cities: Riga (743,000) + Daugavpils (112,000), Liepaja (85,000), Jelgava (62,000)
Currency: Latvia replaced its previous currency, the Latvian lats (LVL), with the euro on 1 January 2014
Languages: Latvian (official) 56.3%, Russian 33.8%, other 0.6% (includes Polish, Ukrainian, and Belarusian), unspecified 9.4%
Ethnicity: Latvian 61.1%, Russian 26.2%, Belarusian 3.5%, Ukrainian 2.3%, Polish 2.2%, Lithuanian 1.3%, other 3.4%
Religion: Lutheran, Roman Catholic, Russian Orthodox
President: (Mr.) Raimonds VEJONIS (since 8 July 2015)
Prime Minister: (Mr.) Maris KUCINSKIS (since 11 February 2016)
Date of EU accession: 1 May 2004
mapa



KEY FEATURES

  • One of the richest forestry resources in Europe
  • Most of Latvia's territory is less than 100 m (330 ft) above sea level
  • More than 25% of population is Russian-speaking
  • One of the most wanted FDI destinations in Europe
  • Exports contribute to nearly a third of GDP
  • Corruption and low birth rate are major challenges to economic vitality

MACROECONOMIC OVERVIEW

Latvia's economy grew by 50% between 2004 and 2007 but the global financial crisis of 2008-9 hit the country hard, and the former Baltic tiger endured one of the worst recessions in the EU. The social turmoil triggered by the financial crisis led to the fall of the Godmanis government in February 2009. By January 2010, unemployment had soared to 20%, prompting fears of further political instability. Deep public spending cuts introduced by the subsequent Dombrovskis government led to discontent at home, but impressed international lenders enough to earn Latvia an IMF/European Union 7.5bn euro ($10bn) bailout.

This has helped Latvia's economic recovery, and it returned to growth in 2011. By late 2012, its economic revival was the EU's strongest. The country joined the eurozone at the start of 2014, despite the unpopularity of the move. Despite a relatively successful economic transition, unemployment remains persistently high, and in recent years many young Latvians have left the country to seek opportunities abroad. Between 2000 and 2011, the population fell by about 13%.

During the period from 2011 to 2013, the average growth of the Latvian economy amounted on average 4.4% annually. In 2014, the GDP increased by 2.4%. The growth rate slowed down due to the weak economic development within the EU, as well as the worsening of the economic situation in Russia.

Despite the geopolitical tensions within the region, the Latvian economy continued to grow in 2015 and the growth rate reached 2.7%.


Selected economic indicators, Latvia, 2010 - 2016

    2010 2011 2012 2013 2014 2015 2016*
GDP
Real GDP growth
%
-3.8
6.2
4.0
3.0
2.4
2.7
2.8
GDP at current prices
€ bn
17.72
20.14
21.98
22.81
23.58
24.38
Foreign trade
Exports
€ bn
9.54
11.68
13.52
13.77
14.03
14.32
Imports
€ bn
9.81
12.69
14.50
14.50
14.56
14.67
Balance
€ bn
-0.26
-1.00
-0.98
-0.73
-0.53
-0.35
Prices
CPI - average inflation rate
%
-1.2
4.2
2.3
0.0
0.7
0.2
0.2
PPI - industry - average
%
2.9
7.6
3.7
1.8
0.4
-0.9
Employment
Registered unemployment
%
18.7
16.2
15.0
11.9
10.8
9.9
9.6
Average monthly gross wage
633
660
685
716
765
818
Exchange rates
LVL/USD average
0.537
0.509
0.545
0.531
-
-
-
LVL/EUR average - pegged rate
0.7
0.7
0.7
0.7
-
-
-

*data for 2016 - forecast
Source: Eurostat, Central Statistics Bureau of Latvia, IMF, 2016



KEY SECTORS


Agriculture
Agricultural land makes up 39% of Latvia’s total land. Latvia’s main agricultural activities are dairy farming, pig breeding, grain production and potatoes. Livestock is also reared including, cattle, pigs, sheep and poultry. Crops grown are mainly cereals and grains, vegetables and sugar beet, 70% of which is exported to other countries.


Fisheries

Latvia’s fishing fleet is made up of around 900 vessels. The country has a long tradition of fishing, which began during Soviet times. Traditionally, fish such as salmon and trout are predominantly caught. However, in recent years, the government has taken action to protect valuable fish stocks and various fish farms have been set up.


Forestry & Wood Products

Forest cover 44% of the national territory, Latvia has one of the richest forest resources in Europe. These industries contribute approximately 20.4% of GDP of the manufacturing industry. This is one of the main reasons Latvia has a significant export industry; wood products account for one third of total exports.


Food Processing & Beverages

Almost a quarter of the total manufacturing turnover is accounted for the food industry which is one of Latvia’s richest industries. The food processing industry covers 29% of Latvia’s industrial capacity.
75% of the products are sold within Latvian borders, the food processing industry is therefore the least-exported industry in Latvia. The main sub-industries are milk processing, drinks, fish processing and meat processing. The most important benefit of Latvia’s food processing and beverage sector include accessibility of high-quality raw materials, stable domestic demand, price competitiveness within western markets and high product acknowledgment in the Russian market.


ICT

The IT industry is Latvia’s fastest growing industry sector with an annual growth of 20-30%. In recent years exports from IT sector have risen rapidly, growing annually by approximately 15%. The industry has benefited from having a well-qualified workforce that has gained expertise in IT. In addition the mobile industry has developed which is due to expertise in IT industry. Latvian companies have benefitted from outsourcing opportunities from large IT firms such as IBM, Microsoft, and Unisys, and various Latvian companies have been acquired by companies such as Exigen, TietoEnator.


EXPORTS & IMPORTS


Latvian exports contribute to nearly a third of GDP.


2015 export and import data:




Main import partners:
Lithuania – 17.3%
Germany – 11.2%
Poland – 11.1%
Russia – 8.6%
Estonia - 7.5%


Main export partners:
Lithuania – 19.0%
Estonia – 11.7%
Russia – 8.1%
Germany – 6.4%
Poland – 6.0%


Latvia external trade - 2015




See references for our track record in Latvia.





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