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flag Latvia Latvia: Economic and Political Outline

Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

Economic Indicators

Since its independence from the former Soviet Union, Latvia has implemented market-oriented reforms.  The country's economy has since then experienced a very good performance due to a constant growth in domestic consumption and the contribution of foreign investment. In addition, Latvia became a member of the EU on May 1st, 2004, and now benefits from European subsidies: an amount of EUR 1.8 billion was granted between 2004 and 2008. Latvia benefits also of a well-trained and inexpensive workforce.

However, the country was strongly affected by the financial crisis in 2008-2009, its GDP had a drop of 17% with an unemployment rate that reached 17% in 2010, which placed the economy and the country's social fabric in jeopardy.  The share of the underground economy officially reached 40%.  In January 2009, riots broke out in the country. Given the size of the crisis, the country had to ask the International Monetary Fund and the European Union for assistance. An emergency loan of EUR 7 billion was granted at a price of a very unpopular austerity policy.  The government has established a policy of re-nationalization of certain banks. 

In 2010 the GDP had a reduction of 6% during the first quarter. Only the transport and communications sectors and the transforming industries had a slight growth.  The foreign debt of Latvia reached USD 9.6 billion. Latvia's gross foreign debt, which has been sharply increasing during the last few years, represents more than 100% of the GDP. The rate of inflation has also increased in the last few years reaching 17.5%.

 
Main Indicators 2009201020112012 (e)2013 (e)
GDP (billions USD) 25.8924.0127.41e28.6230.09
GDP (Constant Prices, Annual % Change) -18.0-0.34.0e3.04.0
GDP per Capita (USD) 11,44810,68012,22612,80413,504
General Government Gross Debt (in % of GDP) 32.839.9e39.6e40.543.4
Inflation Rate (%) 3.3-1.2e4.22.32.2
Unemployment Rate (% of the Labor Force) 17.319.016.114.513.0
Current Account (billions USD) 2.240.860.28-0.14-0.40
Current Account (in % of GDP) 8.63.6e1.0e-1.3-

Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector contributes about 4% to the GDP and employs 7.7% of the population. It is dominated by cattle breeding, in addition to the production of grain, sugar beets, potatoes and vegetables. Apart from timber, which is largely exported, Latvia has almost no natural resources. The country has to import all its energy products, mainly from Russia.

The industrial sector contributes about 24% to the GDP and employs about 28.6% of the workforce. The construction, metallurgy, industrial food-processing, and mechanical engineering sectors are booming.

The Latvian economy is driven by the services sector which contributes 72.4% to the GDP and employs 63.5% of the Latvian active population.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.7 25.0 66.3
Value Added (in % of GDP) 4.1 21.8 74.1
Value Added (Annual % Change) 3.2 2.2 -1.4

Source: World Bank - Last Available Data.

 
 
Monetary Indicators 20062007200820092010
Latvian Lat (LVL) - Average Annual Exchange Rate For 1 USD 0.560.510.480.510.53

Source: World Bank - Last Available Data.

 
 
Learn more about Market Analysis about Latvia on Globaltrade.net, the Directory for International Trade Services.
 

Indicator of Economic Freedom

Score:
65.8/100
Position:
Moderately free
World Rank:
52/179
Regional Rank:
23/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

 

Country Risk

See the Country Risk Analysis Provided By Ducroire.

 

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Foreign Trade in Figures

The Latvian market is open and competitive. The EU is its largest trade partner followed by Russia.

The foreign trade share in the country’s GDP is around 80%. The three main export partners of Latvia are Lithuania, Estonia, and Germany. These countries are reinforcing their positions in the Latvian market. The country's main exports are:  wood, coal, mineral fuels, oil, iron, steel, machinery, electrical and electronic equipment.

The share of imports dropped 50% since the crisis in 2008.  The main import partners are Lithuania, Germany, Russia, Poland, Estonia, Sweden and Finland.  Latvia imports mainly machinery, chemical products, fossil fuel, electricity and vehicles.

 
Foreign Trade Indicators 20062007200820092010
Imports of Goods (million USD) 11,54115,32216,1439,79311,483
Exports of Goods (million USD) 6,1558,30810,1447,6999,455
Imports of Services (million USD) 1,9712,6783,1522,2402,128
Exports of Services (million USD) 2,6313,6664,4823,7823,584
Imports of Goods and Services (Annual % Change) 19.414.7-11.2-33.58.6
Exports of Goods and Services (Annual % Change) 6.510.02.0-14.110.3
Imports of Goods and Services (in % of GDP) 66.362.456.545.454.2
Exports of Goods and Services (in % of GDP) 44.942.342.843.953.4
Trade Balance (million USD) -5,131-6,898-6,014-1,822-1,546
Trade Balance (Including Service) (million USD) -4,469-5,896-4,666-255-61
Foreign Trade (in % of GDP) 111.2104.799.389.3107.6

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2010
Lithuania 16.2%
Estonia 13.5%
Russia 10.6%
Germany 8.7%
Sweden 6.3%
See More Countries 44.7%
Main Suppliers
(% of Imports)
2010
Lithuania 17.1%
Germany 11.5%
Russia 10.0%
Poland 7.9%
Estonia 7.2%
See More Countries 46.4%

Source: Comtrade, Last Available Data

 

Main Products

Main Exports
(% of Exports)
2010
Wood sawn or chipped lengthwise, sliced or barked,...Wood sawn or chipped lengthwise, sliced or barked, whether or not planed, sanded or end-jointed, of a thickness of > 6 mm 5.9%
Bars and rods, of iron or non-alloy steel, not...Bars and rods, of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but incl. those twisted after rolling (excl. in irregularly wound coils) 4.2%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 3.5%
Wood in the rough, whether or not stripped of bark...Wood in the rough, whether or not stripped of bark or sapwood, or roughly squared (excl. rough-cut wood for walking sticks, umbrellas, tool shafts and the like; wood in the form of railway sleepers; wood cut into boards or beams, etc.) 3.0%
Fuel wood, in logs, billets, twigs, faggots or...Fuel wood, in logs, billets, twigs, faggots or similar forms; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms 3.0%
See More Products 80.5%
Main Imports
(% of Imports)
2010
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 8.1%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 4.8%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 4.2%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 2.8%
Television receivers, whether or not incorporating...Television receivers, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus; video monitors and video projectors 2.1%
See More Products 77.9%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 

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Sources of General Economic Information

Ministries
Ministry of the Economy
Ministry of Finance
Ministry of Foreign Affairs
Ministry of the Environment
Ministry of Transport and Communications
Statistical Office
Central Statistics Bureau
Central Bank
Central Bank of Latvia
Stock Exchange
Nordic Exchange
Search Engines
Search (in Latvian)
TV net (in latvian)
Info 1188
Google search engine
Economic Portals
Economic portal - The Baltic Times

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Political Outline

Executive Power
The President is the head of state and is elected by the parliament in a separate election for a four year term. The President is the commander-in-chief of the armed forces. He appoints the Prime Minister as head of the government who, in turn, has to receive a vote of confidence from the parliament and serves a four year term. The Prime Minister enjoys the executive powers which include implementation of the law in the country and running the day-to-day affairs.The Council of Ministers is nominated by the Prime Minister and appointed by the Parliament.
Legislative Power
The legislature in Latvia is unicameral. The Parliament consists of 100 seats; its members are elected by direct popular vote to serve four-year terms. This parliament is called Saeima.

The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. Legislative power is vested in both the government and the parliament. The government does not have the power to dissolve the parliament. The people of Latvia enjoy considerable political rights.

Main Political Parties
Latvia has a multi-party system, where no one party has a chance of gaining power alone, and parties must work with each other to form coalition governments. The major parties in the country are:
- JL (New Era Party)
- TP (People's Party)
- LPP (First Party of Latvia)
- ZZS (Latvian Green Party)
- TB/LNNK (For the Fatherland and Freedom)
Current Political Leaders
President: Valdis ZATLERS (since 8 July 2007) – Popular Front of Latvia; he succeeded Mrs VIKE FREIBERGA.
Prime Minister: Valdis DOMBROVSKIS (since march 2009).
Next Election Dates
Presidential: in 2015
Parliamentary: October 2014
 

Indicator of Freedom of the Press

World Rank:
30/178
Evolution:
16 places down compared to 2009

Source: Worldwide Press Freedom Index 2010, Reporters Without Borders

 

Indicator of Political Freedom

Ranking:
Free
Political Freedom:
2/7
Civil Liberties:
1/7

Map of freedom 2010
Source: Freedom House

 

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Last Updates: January 2012