According to Swedbank, Latvia’s economy will grow by 2.2% in 2025, and the pace will accelerate to 2.8% in 2026. After a 0.2% decline in GDP in 2024, there were already signs of recovery by the end of the year, which creates positive expectations for the next period.
The main drivers of growth will be: increased exports, increased household consumption, and increased public investment.
The labour market in Latvia remains stable: the unemployment rate continues to decline and wages are growing, although the rate of increase is slowing down. Inflation in 2025 is forecast at 2.6 per cent, which is moderate.
One of the key challenges for the economy remains the implementation of projects financed by the EU’s Recovery and Resilience Fund (RRF). All planned projects should be completed by mid-2026 and their successful implementation could catalyse further economic growth.