Translated using ChatGPT service.
To rapidly enhance the living standards and economic well-being of Latvian residents, considering the extremely rapid geopolitical, economic, and technological changes of recent years, the Ministry of Economics has prepared a new strategy for Latvia's economic growth.
The main goal of this strategy is to double the economy's volume within the next ten years, achieving a GDP of €83 billion by 2035. This will be accomplished by significantly increasing the productivity of Latvian companies – from 60% of the EU average in 2023 to the EU average level by 2035. A key element for achieving rapid growth is the use of innovations and the latest technologies, including artificial intelligence, and excelling in green economy sectors, renewable energy, and bioeconomy.
“The new challenging situation in the economies of Latvia and Europe requires the government to look at things anew. In recent years, economic policy has not been implemented purposefully, gradually leading Latvia to fall behind our closest neighbors. However, I am convinced that we have significant potential, which can be unlocked through a set of specific measures in several areas – ensuring financing for business and export expansion, developing human capital, reducing bureaucracy, attracting foreign investments, promoting innovations and modern technologies. And, of course, Latvia, as already one of the greenest countries in Europe, must utilize its potential in renewable energy, hydrogen technologies, and bioeconomy, becoming both a net exporter of electricity and a leader in green technology development,” emphasizes Minister of Economics Viktors Valainis.
The new economic growth strategy foresees a GDP growth rate of 4-5% annually in the medium term, provided that inflation remains stable at around 2%. It is also necessary to ensure a labor force of at least 900,000 employed individuals per year, achieve an export share of at least 80% of GDP, and secure an annual volume of private investments of at least 25% of GDP. It is expected that productivity-based growth over the next 10 years will ensure an increase in the average gross monthly salary to at least €3200.
How to Achieve This?
The fundamental prerequisite for Latvia's development is basing economic competitiveness on technological factors, production efficiency, innovation, and the ability to adapt to and leverage the opportunities created by global changes.
To achieve the government's economic goals, it is crucial to improve the availability of financing for businesses and actively attract investments into the economy. Targeted state investments in the economy, together with EU funds, including the Recovery Fund, will provide significant support for increasing the productivity, digitalization, energy efficiency, export capacity, and competitiveness of our businesses, which in turn will ensure the growth of Latvia's economy and export volumes. At the same time, it requires responsible investment to avoid additional pressure on inflation.
Main Action Directions for Increasing Latvia's Economic Competitiveness:
- Investments in Human Capital: Improving the quality of education and public health, enhancing requalification and upskilling processes, more efficient use of the workforce, attracting talent and quality labor.
- Competitive Entrepreneurship: Allocating resources for business development and modernization, implementing new business ideas, supporting business competitiveness, developing innovation systems and digitalization, reducing bureaucracy, and digitally transforming public administration.
- Regionally Balanced Growth: Promoting the creation of well-paid jobs and globally competitive businesses, ensuring connectivity of regional centers and accessible quality public services.
- Modern Infrastructure and Accessible Housing: Reducing bureaucratic barriers for real estate development, promoting building stock renewal and compliance with climate neutrality, developing a market for affordable rental housing, improving transport infrastructure, and ensuring widespread public transport mobility.
- Climate Change and Investments in Green Infrastructure: Promoting energy independence and implementing ambitious renewable energy projects.
The informative report on Latvia's economic development, “LATVIAN ECONOMY – PRODUCTIVITY, COMPETITIVENESS, GROWTH,” is prepared to stimulate discussion and public debate in the Saeima on the challenges of Latvia's economic development and the country's growth priorities. On May 16, debates will be held in the Saeima on these issues to discuss the country's development priorities jointly.