Latvia

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Economics

Economy - overview

Latvia is a small, open economy with exports contributing significantly to its GDP. Due to its geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronic devices. The bulk of the country's economic activity, however, is in the services sector. Corruption continues to be an impediment to attracting FDI flows and Latvia's low birth rate and decreasing population are major challenges to its long-term economic vitality. Latvia's economy experienced GDP growth of more than 10% per year during 2006-07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the softening world economy. GDP plunged 18% in 2009 - the three Baltic states had the world's worst declines that year. Thanks to strong export growth in 2009 and 2010, the economy experienced its first real quarterly GDP growth in over two years (2.9%) in the third quarter of 2010. The IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro. This agreement calls for reduction of Latvia's fiscal deficit to below 3% of GDP by 2012, in order to meet the Maastricht Treaty criteria for euro adoption. DOMBROVSKIS' government enacted major spending cuts to reduce the fiscal deficit to a maximum of 8.5% of GDP in 2010, and Latvia has approved a 2011 budget with a projected deficit of 5.4% of GDP. The majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises. Latvia officially joined the World Trade Organization in February, 1999. EU membership, a top foreign policy goal, came in May 2004. Latvia's current major financial policy goal, entrance into the euro zone, is targeted for 2014.

GDP (purchasing power parity):

$32.51 billion (2010 est.)

country comparison to the world: 106

$32.62 billion (2009 est.)

$39.76 billion (2008 est.)

note: data are in 2010 US dollars

 

GDP (official exchange rate):

$24.05 billion (2010 est.)

 

GDP - real growth rate:

-0.3% (2010 est.)

country comparison to the world: 192

-18% (2009 est.)

-4.2% (2008 est.)

 

GDP - per capita (PPP):

$14,700 (2010 est.)

country comparison to the world: 77

$14,600 (2009 est.)

$17,700 (2008 est.)

note: data are in 2010 US dollars

 

GDP - composition by sector:

agriculture: 4%

industry: 21.7%

services: 74.4% (2010 est.)

 

Labor force:

1.178 million (2010 est.)

country comparison to the world: 139

 

Labor force - by occupation:

agriculture: 12.1%

industry: 25.8%

services: 61.8% (2005 est.)

 

Unemployment rate:

16.1% (2011, October)

 

 

Population below poverty line:

NA%

 

Household income or consumption

by percentage share:

lowest 10%: 2.7%

highest 10%: 27.6% (2008)

 

Distribution of family income - Gini index:

36.1 (2010)

32 (1999)

 

Investment (gross fixed):

18% of GDP (2010 est.)

country comparison to the world: 145

 

Budget:

revenues: $8.471 billion

expenditures: $10.31 billion (2010 est.)

 

Taxes and other revenues:

35.2% of GDP (2010 est.)

country comparison to the world: 66

 

Budget surplus (+) or deficit (-):

-7.7% of GDP (2010 est.)

country comparison to the world: 183

 

Public debt:

44.7% of GDP (2010 est.)

country comparison to the world: 61

36.7% of GDP (2009 est.)

 

Inflation rate (consumer prices):

-1.1% (2010 est.)

country comparison to the world: 5

3.5% (2009 est.)

 

Central bank discount rate:

4% (31 December 2009)

country comparison to the world: 65

6% (31 December 2008)

 

Commercial bank prime lending rate:

9.56% (31 December 2010 est.)

country comparison to the world: 38

16.23% (31 December 2009 est.)

 

Stock of narrow money:

$7.186 billion (31 December 2010 est.)

country comparison to the world: 78

$6.092 billion (31 December 2009 est.)

 

Stock of broad money:

$12.28 billion (31 December 2010 est.)

country comparison to the world: 96

$11.85 billion (31 December 2009 est.)

 

Stock of domestic credit:

$26.03 billion (31 December 2010 est.)

country comparison to the world: 72

$28.7 billion (31 December 2009 est.)

 

Market value of publicly traded shares:

$1.252 billion (31 December 2010)

country comparison to the world: 97

$1.824 billion (31 December 2009)

$1.609 billion (31 December 2008)

 

Agriculture - products:

grain, rapeseed, potatoes, vegetables; pork, poultry, milk, eggs; fish

 

Industries:

processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics

 

Industrial production growth rate:

14.3% (2010 est.)

country comparison to the world: 11

 

Electricity - production:

5.114 billion kWh (2008 est.)

country comparison to the world: 114

 

Electricity - consumption:

6.836 billion kWh (2008 est.)

country comparison to the world: 101

 

Electricity - exports:

2.605 billion kWh (2009 est.)

 

Electricity - imports:

1.654 billion kWh (2009 est.)

 

Oil - production:

0 bbl/day (2010 est.)

country comparison to the world: 188

 

Oil - consumption:

41,000 bbl/day (2010 est.)

country comparison to the world: 104

 

Oil - exports:

3,457 bbl/day (2009 est.)

country comparison to the world: 109

 

Oil - imports:

37,520 bbl/day (2009 est.)

country comparison to the world: 97

 

Oil - proved reserves:

0 bbl (1 January 2011 est.)

country comparison to the world: 153

 

Natural gas - production:

0 cu m (2009 est.)

country comparison to the world: 205

 

Natural gas - consumption:

1.56 billion cu m (2009 est.)

country comparison to the world: 84

 

Natural gas - exports:

0 cu m (2009 est.)

country comparison to the world: 130

 

Natural gas - imports:

1.56 billion cu m (2009 est.)

country comparison to the world: 51

 

Current account balance:

$871 million (2010 est.)

country comparison to the world: 49

$2.283 billion (2009 est.)

 

Exports:

$8.989 billion (2010 est.)

country comparison to the world: 92

$7.387 billion (2009 est.)

 

Exports - commodities:

food products, wood and wood products, metals, machinery and equipment, textiles

 

Exports - partners:

Russia 15.2%, Lithuania 15.2%, Estonia 12.6%, Germany 8.2%, Sweden 5.9%, Poland 4.7% (2010)

 

Imports:

$10.54 billion (2010 est.)

country comparison to the world: 89

$9.209 billion (2009 est.)

 

Imports - commodities:

machinery and equipment, consumer goods, chemicals, fuels, vehicles

 

Imports - partners:

Lithuania 16.3%, Germany 11.4%, Russia 10%, Poland 7.5%, Estonia 7%, Finland 4.8% (2010)

 

Reserves of foreign exchange and gold:

$7.17 billion (31 December 2010 est.)

country comparison to the world: 78

$6.907 billion (31 December 2009 est.)

 

Debt - external:

$42.07 billion (30 June 2011 est.)

country comparison to the world: 62

$39.55 billion (31 December 2010 est.)

 

Stock of direct foreign investment - at home:

$11.97 billion (31 December 2010 est.)

country comparison to the world: 80

$11.63 billion (31 December 2009 est.)

 

Stock of direct foreign investment - abroad:

$1.011 billion (31 December 2010 est.)

country comparison to the world: 74

$996.8 million (31 December 2009 est.)

 

Exchange rates:

lati (LVL) per US dollar -

0.5422 (2010)

0.5056 (2009)

0.4701 (2008)

0.5162 (2007)

0.5597 (2006)