In the first half of 2024, the situation in the economy, although inflation rates stabilized, was stagnant due to the unfavourable external environment. In the first half of the year, compared to the corresponding period of 2023, GDP increased by only 0.1%. Private and public consumption increased, while exports, imports and investments decreased.
The Ministry of Economy predicts that in 2024 the economy will be close to the level of the previous year, but in 2025 economic activity will increase slightly.
Further economic development in the medium term depends on external factors and the progress of reforms. The main risk to Latvia's growth lies in global economic developments, particularly geopolitical situations. The future of the EU’s overall economic space is also crucial. Latvia's economic advantages in the medium term will largely depend on the achieved macroeconomic stability, resulting in improved credit ratings, as well as the efficiency of planned EU support programs and improvements in the business environment. A prolonged war in Ukraine may slow the pace of economic recovery.
With Latvia's economic competitiveness based primarily on technological factors, improvements in production efficiency, and innovation, rather than cheap labour and low resource prices, Latvia's growth rate in the medium term could potentially reach 4-5% annually.
Previous reviews and other publications on economic development can be found here ...
