Latvia overview

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 contributed €10,000 for activities in Ukraine in 2015.

The EBRD’s latest strategy for Latvia was adopted on 10 February 2016.

EBRD forecast for Latvia’s real GDP growth in 2019 3.3%

EBRD forecast for Latvia’s real GDP growth in 2020 2.7%

GDP growth in Latvia accelerated to 4.8 per cent in 2018, mainly supported by investment and household consumption. Investment registered an impressive growth rate of 16.4 per cent, fuelled by improved absorption of EU funds. Following several years of stagnation, strong GDP growth supported employment growth, particularly in the construction sector.

Household consumption will likely remain solid and at the core of economic growth in the short term but, together with investment, will slow down somewhat once EU fund inflows reach their peak. Exports, particularly of financial services, will remain subdued, driven by the ongoing reduction of the banking sector’s exposure to non-EU clients.

As a result, GDP growth in 2019 is estimated to drop to 3.3 per cent and then to 2.7 per cent in 2020.

Latvia in the EBRD’s 2018-19 Transition Report

Latvia in the latest beeps survey