Thanks to a moderate acceleration of growth in the economies of Latvia’s main trading partners, the inflow of European Union funds, and government economic stimulus measures—particularly in the areas of credit provision and investment promotion—economic activity in Latvia increased in 2025.
This conclusion comes from the Ministry of Economics (MoE) review of Latvia’s economic development in 2025, which assessed the current state of the economy and projected development prospects.
In recent years, Latvia’s socio-economic development has faced challenges. Global changes—economic fluctuations, rising inflation, and geopolitical disruptions—have left their mark on growth rates, resulting in stagnation in Latvia’s economy in 2023 and 2024.
“The economic dynamics of 2025 demonstrate that Latvia’s economy has learned to operate under high-risk conditions and can gradually restore growth. Statistical data show stable economic recovery: GDP growth reached 1.7% in the first three quarters, and 2.5% in the third quarter, exceeding previous forecasts. This is a clear signal that the economy is returning to a growth trajectory. However, future success will not be automatic. It will depend on our ability to continue reforms, support innovation, and actively create an environment conducive to investment and exports. Growth does not happen by itself—it must be promoted, supported, and guided. And currently, Latvia is on the right path,” emphasizes Minister of Economics Viktors Valainis.
To achieve the government’s economic objective—doubling the Latvian economy by 2035—the MoE is implementing a range of measures to boost economic development and improve citizens’ well-being. Access to financing for businesses is being significantly improved, and investments in the national economy are actively being attracted.
Key elements for achieving these objectives include strengthening Latvia’s security, developing green industries, promoting regional specialization and the potential of Riga, reducing bureaucracy, increasing business productivity and export capacity, implementing significant human capital reforms, fostering innovation, adopting the latest technologies, digitalization, and artificial intelligence, as well as providing modern infrastructure. To achieve these goals, the MoE actively engages in dialogue with businesses, NGOs, and other societal representatives.
Latvia’s medium-term economic development depends on external conditions and the pace of reforms. The greatest risks to Latvia’s growth are linked to the global economic situation, particularly geopolitical developments. The future development of the EU economic area is also important. In the medium term, Latvia’s growth rate could potentially reach 4–5% per year. If the war in Ukraine persists, the pace of economic recovery may be slower.
MoE specialists prepare the Latvia Economic Development Review annually in December. The report describes the ministry’s policies in the areas of business environment, innovation and new technologies, productive investment, export promotion, as well as construction, housing policy, tourism, competition policy, consumer protection, and more.
The 2025 review, along with previous years’ reports, is published on the EM tīmekļvietnē.