Latvia is a member state of the European Union – the largest single market in the world. The average salary has increased twice since Latvia joined the EU, reaching 516 Euros (after taxes) in 2013. The country fulfilled the Maastricht criteria and joined the Eurozone on January 1, 2014. Budget of Latvia has the third smallest deficit in the EU – 0.9%. The current public debt of the country is the fifth lowest in the Union.
Strict fiscal discipline got Latvia out of global financial crisis of 2008. The government honoured all obligations of the international creditors and Latvia’s economy got back on the track between 2011 and 2013. The national credit rating reached a stable A- by 2014. Unemployment decreased to a single digit number by summer 2014. All banks in Latvia passed the stress tests by the European Central Bank later the same year. Both the World Bank and the European Central Bank predict ~4% economic growth until 2018.
Four cornerstones of the Latvian economy are agriculture, chemicals, logistics and woodworking. Other prominent sectors include textiles, food processing, machinery production and green technologies.
Agriculture enjoys the fertile soil and temperate climate of Latvia. It is the traditional trade of Latvians and is still relevant today. The annual production is worth over a billion Euros (1.2 billion in 2012). Grain makes up a third of the sector. Quality dairy products and honey lead the niche of high added value exports.
Chemical industry relies on highly educated human resources. Pharmacy, recycling, eco-friendly chemicals and bio cosmetics are manufactured in Latvia and widely exported abroad. University educated local experts provide innovative fundamental research and development (as in the Institute of Organic Synthesis). Medicinal discoveries are among the highlights of the Latvian chemical industry.
Logistics is well established since time immemorial thanks to the geographic location of Latvia. Ports, rail and roads of Latvia have always linked Europe and the rest of the West with the East. 25 million customers are reachable within 48 hours in the Baltic region next to Latvia. A rail route from Rīga to China delivers goods up to a month faster than via the shortest sea route, as of 2008. Airport of Rīga provides European and transcontinental flights to almost a hundred destinations.
Woodworking thrives on the green gold of Latvia. Half of the country is covered by lush forests,some of which are cut and exported. Raw lumber and manufactured products are a notable component of Latvian exports. Designated natural reserves, state owned forests and long-term business strategies keep the balance between business and nature.
High-tech electronics, information technologies and design form the new success stories of the Latvian economy. Established and still progressive infrastructure in logistics and communications makes the life of business much easier and their products and services – more competitive. Innovations made in Latvia are highly appreciated in the world markets.
© Latvian Institute 2015, Photos by: Kārlis Ustups, Edijs Pālens, Ieva Luka