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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 has benefited from large European subsidies (EUR 1.8 billion between 2004 and 2008).

However, the country's economy showed signs of overheating between 2005-2007 and subsequently was strongly affected by the financial crisis of late 2008, its GDP had dropped of 17% and the unemployment rate reached 17% in 2010. After three years of recession, which placed the economy and the country's social fabric in jeopardy, the Latvian economy returned to strong growth in 2011. The deep structural reforms undertaken as part of the assistance program provided jointly by the IMF and EU in late 2008 enabled Latvia to boost its exports, partly because of improved competitiveness. Latvia has a well trained and inexpensive workforce .

Latvia's goal is now to join the eurozone in 2014. In the currently unfavorable European context, the country needs to continue working towards the consolidation of public finances and a return to price stability. Unemployment is expected to remain high in 2012 (around 16%) and informal economy still represents over 30% of GDP. The government's target of a growth rate of 4% in 2012 appears ambitious given the deteriorating external environment of Latvia and the current rate of price increase.

 
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. Fishing and forestry are also important parts of its primary sector.

The industrial sector contributes about 24% to the GDP and employs about 28% of the workforce. The construction, metallurgy, industrial food-processing, and mechanical engineering sectors are booming. Latvia is well known as an important producer of railway equipment, radios, refridgerators, medication, wood and steel products.

The Latvian economy is driven by the services sector which contributes more than 72% to the GDP and employs over 60% of the Latvian active population. Thanks to attractive fiscal regulation, Latvia has developped a large financial services sector. The country offers a corporation tax rate of 15%, on of the lowest within the European Union.

 
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.

 

Find more information about your business sector on our service Market reports.

 
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.

 

Find out all the exchange rates daily on our service Currency converter.

 
Learn more about Market Analyses about Latvia on Globaltrade.net, the Directory for International Trade Service Providers.
 

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

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

 

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, of which Latvia has been a member since 2004, is its largest trade partner, followed by Russia.

With its 530 km-long Baltic coastline, Latvia is bordered by Belarus and Russia to the east, Estonia to the north and Lithuania to the south. Its position allows it to function as a bridge between the two major economic areas of the EU and the CIS.

In terms of foreign trade, Latvia's main customers are Russia, Lithuania, Estonia and Germany. Its main suppliers are Lithuania, Germany, Russia, Poland and Estonia. The country exports mainly wood and coal, mineral fuels & oils, iron and steel, machinery and electrical and electronic equipment. Imports, which dropped by 50% since the 2008 crisis, resumed in 2011. Key trading partners are Lithuania, Germany, Russia, Poland, Estonia, Sweden and Finland. Latvia mainly imports machinery, chemicals, fossil fuel and electricity and vehicles.

 
Foreign Trade Indicators 20072008200920102011
Imports of Goods (million USD) 15,32216,1439,79311,48315,945
Exports of Goods (million USD) 8,30810,1447,6999,45513,161
Imports of Services (million USD) 2,6783,1522,2402,1922,574
Exports of Services (million USD) 3,6664,4823,7823,6254,354
Imports of Goods and Services (Annual % Change) 14.7-11.2-33.58.6-
Exports of Goods and Services (Annual % Change) 10.02.0-14.110.3-
Imports of Goods and Services (in % of GDP) 62.456.545.454.2-
Exports of Goods and Services (in % of GDP) 42.342.843.953.4-
Trade Balance (million USD) -6,898-6,014-1,822-1,546-
Trade Balance (Including Service) (million USD) -5,896-4,666---
Foreign Trade (in % of GDP) 104.799.389.3107.6-

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

 

Main Partner Countries

Main Customers
(% of Exports)
2011
Lithuania 17.8%
Estonia 13.9%
Russia 10.6%
Germany 8.3%
Sweden 6.1%
See More Countries 43.3%
Main Suppliers
(% of Imports)
2011
Lithuania 18.7%
Germany 12.1%
Russia 8.7%
Poland 7.9%
Estonia 7.2%
See More Countries 45.4%

Source: Comtrade, Last Available Data

 

Main Products

Main Exports
(% of Exports)
2011
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 4.8%
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 4.8%
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) 3.6%
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) 3.3%
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) 3.3%
See More Products 80.2%
Main Imports
(% of Imports)
2011
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 10.3%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 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) 3.6%
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) 3.2%
Semi-finished products of iron or non-alloy steelSemi-finished products of iron or non-alloy steel 1.7%
See More Products 77.1%

Source: Comtrade, Last Available Data

 
 

To go further, check out our service Import export flows.

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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:
50/179
Evolution:
20 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

 

Indicator of Political Freedom

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

Map of freedom 2010
Source: Freedom House

Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

 

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