Latvia

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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 successfully implemented market-oriented reforms. The IMF noted that Latvia's economic performance during the past few years has been among the best within the EU countries. This good performance is due to a continuous growth of domestic consumption and the contribution of foreign investment. In addition, Lativa became a member of the EU on 1 May 2004 and now benefits from European subsidies: 1.8 billion euros were granted between 2004 and 2008. Latvia has a well-trained, inexpensive workforce. The two main weaknesses of the economy are: a high trade deficit and an enormous foreign debt.

Latvia's current deficit is the highest in absolute value, 3.54 billion euros in the third quarter of 2007. Latvia's gross foreign debt has been rising since 2001 and represented 112% of GDP in 2006. The rate of inflation was 17.5% in April 2008. Clear signs of slowing down are perceptible, in spite of the alarming growth of inflation at the beginning of 2008.

Main indicators	2006	2007	2008	2009	2010
GDP (billions USD)	19.94	28.77	34.05	26.95	25.48e
GDP (constant prices, annual % change)	12.2	10.0e	-4.6	-12.0e	-2.0
GDP per capita (USD)	8,688	12,610e	14,997e	11,909e	11,300e
Inflation rate (%)	6.6	10.1	15.3e	3.3e	-3.5e
Unemployment rate (% of the labor force)	-	-	5.5	-	-
Current Account (billions USD)	-4.48	-6.49	-4.48	-1.81e	-1.40e
Current Account (in % of GDP)	-22.5	-22.6	-13.2e	-6.7	-5.5e

Source: IMF - World Economic Outlook Database ; CIA - The world factbook

Note: (e) Estimated data

Main sectors of industry

The agricultural sector contributes nearly 4% to GDP and employs more than 15% of the population. The agricultural sector is dominated by cattle breeding, besides producing grains, 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 22% to GDP and employs about 40% of the workforce. Building & construction, metallurgy, food-processing, and mechanical engineering are booming sectors. The Latvian economy is driven by the services sector which contributes nearly 74% to GDP.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Employment by sector (in % of total employment)	12.1	25.8	61.8
Value added (in % of GDP)	3.3	22.0	74.7
Value added (annual % change)	8.2	5.4	10.9

- last available data.

Monetary indicators	2004	2005	2006	2007	2008
Latvian Lat (LVL) - Average annual exchange rate for 1 USD	0.54	0.56	0.56	0.51	0.48

Source: World Bank - World Development Indicators

Indicator of economic freedom

Score:: 66.6/100
Position:: moderately free
World Rank:: 45 out of 179
Regional Rank:: 23 out of 44

Distribution of Economic freedom in the world
Source: 2008 Index of Economic freedom, Heritage Foundation

Country risk

See the country risk analysis provided by Ducroire.

Foreign trade in figures

The Latvian market is open and competitive. The EU is Latvia's largest trade partner. The share of foreign trade in the country’s GDP is around 78%. The top three export partners of Latvia are: Lithuania, Estonia, and Germany. These countries are reinforcing their positions on the Latvian market. The country mainly exports wood and coal, mineral fuels & oils, iron & steel, machinery, and electric & electronic equipment.

Foreign trade indicators	2003	2004	2005	2006	2007
Imports of goods (millions USD)	5,173	7,002	8,379	11,271	15,125
Exports of goods (millions USD)	3,171	4,221	5,361	6,140	8,227
Imports of services (millions USD)	929	1,178	1,557	1,980	2,702
Exports of services (millions USD)	1,506	1,779	2,163	2,642	3,671
Imports of goods and services (annual % change)	13.1	16.6	14.8	17.5	16.9
Exports of goods and services (annual % change)	5.2	9.4	20.3	5.3	12.5
Imports of goods and services (in % of GDP)	54.6	59.6	62.2	66.3	64.7
Exports of goods and services (in % of GDP)	42.1	44.0	47.8	44.9	44.4
Trade Balance (millions USD)	-2,003	-2,781	-3,018	-5,131	-6,899
Trade Balance (including service) (millions USD)	-1,427	-2,180	-2,413	-4,469	-5,930
Foreign trade (in % of GDP)	96.7	103.5	110.1	111.2	109.1

Source: World Bank

Main partner countries

Main customers (% of exports)	2008
Lithuania	16.5%
Estonia	14.0%
Russia	10.1%
Germany	8.1%
Sweden	6.7%
Denmark	4.6%
United Kingdom	3.8%
Poland	3.7%
Finland	3.1%
Norway	2.6%
Netherlands	2.3%
Belarus	2.2%
France	1.8%
Italy	1.7%
Peru	1.6%
Spain	1.5%
United States	1.5%
Ukraine	1.5%
Ireland	1.1%
Belgium	1.0%
See more countries	44.6%

Main suppliers (% of imports)	2008
Lithuania	16.6%
Germany	12.9%
Russia	10.7%
Estonia	7.2%
Poland	7.0%
Finland	4.5%
Sweden	4.4%
Netherlands	3.6%
Italy	3.4%
Belarus	3.4%
Denmark	2.9%
China	2.3%
France	2.2%
Belgium	1.8%
Austria	1.6%
Czech Republic	1.5%
United Kingdom	1.5%
Hungary	1.2%
Switzerland	1.1%
Spain	1.1%
See more countries	45.6%

Source: Comtrade

Main products

Main exports (% of exports)	2008
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	15.6%
Iron and steelIron and steel	10.7%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	5.9%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	5.8%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	5.8%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	3.4%
Articles of iron or steelArticles of iron or steel	3.3%
Pharmaceutical productsPharmaceutical products	3.2%
Beverages, spirits and vinegarBeverages, spirits and vinegar	3.2%
CerealsCereals	2.7%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	2.5%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	2.1%
Plastics and articles thereofPlastics and articles thereof	2.0%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	1.9%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	1.4%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	1.4%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	1.3%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	1.1%
Glass and glasswareGlass and glassware	1.1%
Copper and articles thereofCopper and articles thereof	0.9%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.9%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.9%
Miscellaneous chemical productsMiscellaneous chemical products	0.9%
Aluminium and articles thereofAluminium and articles thereof	0.8%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.8%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	0.7%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.7%
Rubber and articles thereofRubber and articles thereof	0.7%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.7%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.6%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.6%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.6%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.6%
Ships, boats and floating structuresShips, boats and floating structures	0.5%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.4%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.4%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.4%
Organic chemicalsOrganic chemicals	0.4%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.4%
Railway or tramway locomotives, rolling-stock and...Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds	0.4%
Meat and edible meat offalMeat and edible meat offal	0.3%
Knitted or crocheted fabricsKnitted or crocheted fabrics	0.3%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.3%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.3%
Man-made filamentsMan-made filaments	0.3%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.3%
Products of the milling industry; malt; starches;...Products of the milling industry; malt; starches; inulin; wheat gluten	0.3%
FertilizersFertilizers	0.3%
CottonCotton	0.2%
Live trees and other plants; bulbs, roots and the...Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage	0.2%
Ceramic productsCeramic products	0.2%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.2%
Man-made staple fibresMan-made staple fibres	0.2%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.2%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.2%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.2%
Special woven fabrics; tufted textile fabrics;...Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery	0.2%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.2%
Live animalsLive animals	0.2%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.1%
Furskins and artificial fur; manufactures thereofFurskins and artificial fur; manufactures thereof	0.1%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.1%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.1%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.1%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.1%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.1%
See more products	56.3%

Main imports (% of imports)	2008
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	14.8%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	9.5%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	9.4%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	7.3%
Iron and steelIron and steel	5.5%
Pharmaceutical productsPharmaceutical products	3.6%
Plastics and articles thereofPlastics and articles thereof	3.2%
Articles of iron or steelArticles of iron or steel	2.5%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	1.9%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	1.7%
Beverages, spirits and vinegarBeverages, spirits and vinegar	1.7%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	1.6%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	1.4%
Rubber and articles thereofRubber and articles thereof	1.1%
FertilizersFertilizers	1.0%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	1.0%
Meat and edible meat offalMeat and edible meat offal	1.0%
Miscellaneous chemical productsMiscellaneous chemical products	1.0%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.9%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.9%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.8%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.8%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.8%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.8%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.8%
Glass and glasswareGlass and glassware	0.8%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0.7%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.7%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.7%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.7%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.7%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.7%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.7%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.6%
Aluminium and articles thereofAluminium and articles thereof	0.6%
Sugars and sugar confectionerySugars and sugar confectionery	0.6%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.5%
CerealsCereals	0.5%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.5%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.5%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.5%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	0.5%
Ceramic productsCeramic products	0.4%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.4%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.4%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.4%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.4%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.4%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.3%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.3%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	0.3%
Organic chemicalsOrganic chemicals	0.3%
Copper and articles thereofCopper and articles thereof	0.3%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.3%
Knitted or crocheted fabricsKnitted or crocheted fabrics	0.3%
Railway or tramway locomotives, rolling-stock and...Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds	0.3%
Man-made filamentsMan-made filaments	0.3%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.2%
Live trees and other plants; bulbs, roots and the...Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage	0.2%
Arms and ammunition; parts and accessories thereofArms and ammunition; parts and accessories thereof	0.2%
Products of the milling industry; malt; starches;...Products of the milling industry; malt; starches; inulin; wheat gluten	0.2%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.2%
CottonCotton	0.2%
Man-made staple fibresMan-made staple fibres	0.2%
Ships, boats and floating structuresShips, boats and floating structures	0.2%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.1%
Photographic or cinematographic goodsPhotographic or cinematographic goods	0.1%
Special woven fabrics; tufted textile fabrics;...Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery	0.1%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.1%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.1%
See more products	53.4%

Source: Comtrade

See more products: More imports (Intracen Data)
More exports (Intracen Data)

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
Info 1188
Google search engine
Economic portals: Economic portal - The Baltic Times

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 2011
Parliamentary: October 2010

Indicator of freedom of the press

World Rank:: 8/173
Evolution:: 4 places up compared to 2007

Source: Worldwide Press Freedom Index 2007, Reporters Without Borders

Indicator of political freedom

Ranking:: Free
Political freedom:: 2/7
Civil liberties:: 1/7

Map of freedom 2007
Source: Freedom House

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