Last updated: September 11, 2026
Latvia’s economic activity has steadily picked up steam. Real GDP growth year-on-year accelerated from 0.2% in Q3 2024 to a robust 2.97% by Q2 2026. Despite this positive momentum, the economy continues to operate with some spare capacity: the output gap stood at -2.0% of potential GDP in 2024, moving to -1.58% in 2025, and printing at -1.6% in 2026 before an expected -1.46% in 2027. The labor market reflects this transitional phase, with the unemployment rate moving within a range between 6.7% in February and March 2026 and 7.3% in July 2026.
Price pressures have remained volatile. CPI inflation moved between a low of 2.38% in February 2026 and highs of 3.49% in both December 2025 and May 2026, registering 2.61% in July 2026. Central bank policy rate data is not available for Latvia specifically, as monetary policy decisions are set by the European Central Bank for the whole euro area, not Latvia alone.
Public finances show persistent fiscal deficits alongside stable headline debt metrics. Government revenue moved from 3.73 billion of national currency in Q1 2024 to 4.88 billion of national currency in Q3 2025, while government expenditure ranged between 3.88 billion of national currency in Q1 2024 and 5.54 billion of national currency in Q4 2024. The government budget balance (net lending/borrowing as a percentage of GDP, reflecting the narrower public sector measure) held negative, moving from -2.02% in Q2 2024 to -2.29% in Q1 2026. Official government debt as a percentage of GDP moved between 55.36% in Q3 2025 and 58.55% in Q4 2024, standing at 58.33% in Q1 2026. Meanwhile, the broader measure of total financial liabilities of the general government ranged from 76.8% in Q1 2025 to 81.55% in Q2 2025, printing at 79.72% in Q1 2026; these two debt metrics diverge because they reflect different measurement perimeters.
No sector balance data is available for Latvia.
In foreign trade, Latvia runs a persistent trade deficit. Goods exports to the world moved from 16,304.79 million of national currency in 2020 to a peak of 24,035.17 million of national currency in 2022, before registering 22,418.73 million of national currency in 2025. Goods imports from the world followed a similar trajectory, expanding from 18,140.57 million of national currency in 2020 to 28,770.93 million of national currency in 2022, and standing at 26,520.89 million of national currency in 2025.
Energy metrics point to external dependencies. Net electricity imports stood at 1.07 billion kWh in 2024, fluctuating across a multi-year range from -0.06 billion kWh in 2017 to 2.31 billion kWh in 2022. Additionally, dry natural gas imports were recorded at 29.8 billion cubic feet in 2024, down from a peak of 49.95 billion cubic feet in 2018. These figures interact with broader cost pressures: the Brent crude oil price moved from 61.81 US dollars per barrel in December 2025 to a peak of 103.84 US dollars per barrel in May 2026, before easing to 83.73 US dollars per barrel in July 2026. Concurrently, the EU natural gas price moved from 9.46 US dollars in December 2025 to 17.93 US dollars in July 2026, presenting a specific inflation and energy-security risk for gas-importing European economies.
The national currency's value against the IMF Special Drawing Right (SDR) basket moved between 1.17 units of currency per 1 SDR in October and December 2025 and 1.19 units of currency per 1 SDR in August 2025 and July 2026, standing at 1.18 units of currency per 1 SDR in September 2026. Because a rising value indicates a weaker currency, this slight depreciation may marginally add to imported inflation while supporting trade competitiveness.
Latvia's economy demonstrates strengthening output growth despite lingering spare capacity and modest labor market slack. While fiscal deficits and energy cost volatility demand continued vigilance, external trade flows remain active as the broader macroeconomic recovery unfolds.
This bulletin is generated with AI assistance from the structured economic data collected across this site (national accounts, sector accounts, trade, energy and currency data). It is intended as an accessible summary, not investment advice — figures may be revised as underlying data sources are updated. For the detailed underlying series, see the Nation Account Data and Economic Data sections in the menu above.