Latvia Economy Facts

Economical overview

It took until 2011 before Latvia’s economy began to grow again after the dramatic decline in the late 00s. After a couple of relatively good years, growth slowed down in the mid-2010s, which was partly due to reduced trade with Russia in the wake of the Ukraine crisis. Exports are an important engine for the country’s economy.

The service sector’s share of the economy has increased significantly since the beginning of the 1990s, and today it accounts for three-quarters of GDP. Agriculture has decreased in importance, but forestry is growing. Forest and timber products are important export products for Latvia’s trade-oriented economy as well as food, medicines and pharmacy products, chemical products, electronics and metal products.

  • Major imports by Latvia, covering a full list of top products imported by the country and trade value for each product category.

The high budget deficit has been pushed down with the help of austerity and loans, and since the beginning of the 2010 has been around just over 1 percent of GDP, while the central government debt has also been kept in check. The increasingly stable economic situation enabled Latvia to apply for accession to the euro zone in early 2013. At the New Year 2014, the change from the Latvian currency was lats to euros.

Latvia has undergone major economic changes. Prior to World War II, Latvia had a vibrant market economy with agricultural exports, but the country was industrialized in the Soviet planning economy in the 1940s. Industry and agriculture became dependent on Soviet commodities and markets, and unprofitable production was started with government subsidies. In connection with the transition to market economy after independence in 1991, an economic crisis arose: industrial production was knocked out and unemployment rose, as did inflation. The government succeeded in taking tough measures to reverse the economic situation that brightened in 1994. But the social divisions had increased sharply – corruption and oligarchy had created a rich upper class, while many Latvian people went unemployed. The situation was in the early 00s when Latvia had the highest growth in the EU.

  • Check this abbreviation website to find three letter ISO codes for all countries in the world, including LVA which represents the country of Latvia. Check findjobdescriptions to learn more about Latvia.

Although Latvia’s growth again reached the EU’s highest levels at the beginning of the 2010, GDP was lower than before the crisis and income inequality and unemployment were still among the highest in the EU (see Labor market).

By the middle of the decade, growth slowed down. This was mainly due to the fact that EU sanctions against Russia following its annexation of Crimea, and the import restrictions with which Moscow responded, hit hard on Latvia’s dairy and fisheries exports. Exports to neighboring countries decreased by a quarter in 2014 compared to the previous year. However, foreign trade has subsequently picked up as Latvian companies succeeded in finding new markets, including in the Middle East and North Africa. The economy has also received some traction from private consumption. But the continued relocation is seen by analysts as a threat to long-term growth. The working part of the population is predicted to continue to shrink while the country is losing highly educated labor.

A large part of the economy has remained black, or gray, which is also an obstacle to economic growth that benefits everyone in the population. The shadow economy grew during the crisis years, but has declined and was estimated at 21 percent of GDP in 2016. The tax fraud is extensive.

Small and medium-sized companies are privatized, while the energy and telecom sectors are still partly state-owned following prolonged political struggles. The privatization of real estate has been difficult with legal battles over ownership before the Soviet era. Latvia has the largest banking sector of the Baltic countries. Sweden is a leading investor.

About 70 percent of exports are to the rest of the EU. In Soviet times, about 97 percent of Latvia’s exports to the rest of the Soviet Union went. In recent years, however, trade with Russia has increased again, and transit trade between Russia and the West is of great economic importance to Latvia.


GDP per person

US $ 18,089 (2018)

Total GDP

US $ 34,849 M (2018)

GDP growth

4.8 percent (2018)

Agriculture’s share of GDP

3.3 percent (2018)

Manufacturing industry’s share of GDP

10.5 percent (2018)

The service sector’s share of GDP

63.5 percent (2018)


3.0 percent (2019)

Government debt’s share of GDP

35.9 percent (2018)





Banks are fined for penalties

June 27

Latvian Finansinspektionen convicts three of the country’s banks to fine a total of SEK 6 million for violating EU and US sanctions on North Korea. They are accused of losing money through the lack of control to the North Korean programs to develop nuclear weapons and ballistic robots.

Latvia Economy Facts

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