According to the OECD Economic Surveys 2019, Latvia's economic growth is strong and income convergence continues, even though at a slower pace than before 2008. The labour market is tight, as unemployment fell to its lowest rate in ten years and vacancies are rising fast. Wage growth has been strong supporting household purchasing power. Despite increasing labour costs, Latvian exporters have remained competitive and gained market shares. The macroeconomy appears balanced overall with inflation, public debt and the deficit under control. Financial markets look stable, sustained by the sound macroprudential policy.
What says the survey?
Thanks to sound macroeconomic policies and strong reform efforts, Latvia has achieved impressive economic growth rates above 4% in 2017 and 2018 that is roughly double the OECD average growth.
Unemployment has fallen to 7.4% in 2018, from 9.6% in 2016 and 10.9% in 2014.
Exporters enjoy rising market shares, while living standards and well-being are improving.
Wages grew by 8% in 2018, and core inflation remains moderate at 2%.
These are impressive achievements, especially in the current global economic context of low growth, raising trade tensions and policy uncertainty. Our latest Economic Outlook projects that the Eurozone will grow at a meagre pace of 1.2% in 2019 and 1.4% next year.
The Review highlights several impressive achievements where Latvia is making headway in green growth and tackling climate change. In recent years, Latvia has decoupled economic growth and greenhouse gas emissions and is now among the OECD leaders in using renewable energy, which constitutes 40% of primary energy supply, compared to 10% on average in the OECD. This is impressive!
Moreover, the public can easily take part in decisions affecting the environment and has wide access to environmental information. Over the past decades, air quality as adequately as water and waste services, have gradually improved as Latvia brought its environmental regulations in line with European standards.
Last but not least, Latvians are rightfully proud of the stunning beauty of this country, the pristine sandy beaches and the lush forests. Yet the condition of natural environments continues to decline. The government should step up efforts and dedicate more resources to better preserve and manage your extensive network of protected areas.