Latvia overview

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In Latvia we focus on:

Supporting investments in energy security and energy efficiency. The EBRD is focussing in particular on promoting and financing new renewable energy generation capacity and improving energy efficiency.

Strengthening the financial sector. The EBRD has played an important role in restructuring and turning around the systemically important Parex bank. Further engagement in the financial institutions sector will focus on strengthening financial sector stability as well as supporting credit recovery, developing private equity and mezzanine capital financing, particularly to SMEs.

Improving the competitiveness of the export sector. The EBRD is prioritising support for export--oriented firms as well as for cross-border investments by Latvian companies elsewhere in the Baltics or CIS region. The Bank is paying particular attention to supporting investments designed to improve energy efficiency in order to further boost competitiveness.

Policy dialogue. We are conducting policy dialogue with the Latvian authorities with regard to ongoing reforms in the financial sector in close cooperation with the European Commission. The EBRD is continuing to support the improvement of corporate governance in Latvia, particularly in unlisted and state-owned enterprises. In the public sector, policy dialogue is focussed on improving procurement and increasing transparency. Efforts continue to encourage the development of PPPs and supporting legislation, in particular with regard to roads and other infrastructure.

As well as being a country where the EBRD works, Latvia is also an EBRD donor. Latvia takes an active part in the Eastern Europe Energy Efficiency and Environment Partnership Fund and has contributed €85,000 for activities in Ukraine.

The EBRD’s latest strategy for Latvia was adopted on 15 September 2021.

EBRD forecast for Latvia’s real GDP growth in 2022 1.5%

EBRD forecast for Latvia’s real GDP growth in 2023 2.0%

The economic recovery of 4.7 per cent GDP growth in 2021 was supported by the growth of household consumption and a 7.4 per cent growth in manufacturing.  An almost complete removal of pandemic restrictions in 2022 is further supporting demand and household consumption. Labour shortages and a tightened labour market contributed to a rise in wage and salary costs of 8.5 per cent year-on-year in the fourth quarter of 2021. Inflationary pressures, especially in energy and food prices, have been intensified by the war on Ukraine, with inflation reaching 11.2 per cent in March 2022. The government has introduced compensation for the increased energy prices and has brought in monthly allowances for vulnerable groups, such as the elderly and disabled. The overall cost of these measures amounts to around 1.6 per cent of GDP.
Following its decision from April 2022 to stop gas imports from Russia, Latvia will need to access other sources and increase the capacities of its underground gas storage facility. Given the overall geopolitical uncertainties, GDP growth is likely to slow down in 2022 to 1.5 per cent, before recovering to 2.0 per cent in 2023..

Latvia in the EBRD’s 2022-23 Transition Report


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