GDP per capita growth has been strong
The labour market is tightening
Taxes and benefits could do more to lower inequality
The working age population is falling
Recovery in insolvencies is low
Supply of researchers is weak
GDP growth is strong and income convergence continues
The working age population is shrinking fast
Emigrants are relatively less skilled
Poverty is high
Latvia lags behind in some dimensions of well-being
Investment and consumption contribute to GDP growth
Unemployment is falling and vacancies are rising
Wage growth is strong, but inflation remains stable
Unit labour costs are rising, but profitability remains strong
Latvia has diversified its trading partners
Exports have become more sophisticated
Credit growth remains weak
Corruption indicators
House prices are rising in line with income growth
Non-bank loans are rising fast, as many households have problems re-paying debt
The share of foreign deposits in the Latvian banking sector is falling
Illustrative public debt paths
Tax revenues are relatively low as a share of GDP
The tax-and-benefit system could do more to lower high inequality
Taxation of labour income will decrease for some households
Regional disparities are large
The average size of municipalities is small
Informality is widespread
Trust in national institutions is low
The poverty rate for elderly people is high
Life expectancy remains low and unequal
Many Latvians skip doctors’ appointments to avoid high out-of-pocket payments
The renewable energy share is high and CO2 intensity is relatively low
Energy intensity and population exposure to pollution need to fall further
Many families live in substandard housing
Higher building energy efficiency would bring benefits for well-being
Commuting by car has increased substantially
Effective tax rates on CO2 are relatively low
The share of landfill in municipal waste treatment remains high
Road accident fatalities are high
The labour productivity gap is large
The contribution of capital deepening to labour productivity growth has diminished
Firm-level productivity and efficiency of resource allocation are low
Better resource allocation has contributed to productivity growth
Very unprofitable firms are operating especially in some service sectors
Only the most productive manufacturing firms enjoyed high productivity growth
Latvian firms lag behind in the use of digital technologies
Employment is concentrated in small firms
The productivity gap between large and small firms is wide
Only a small share of SMEs innovate
Informality is particularly high in the non-manufacturing sectors
The number of firms using the microenterprise tax regime remains large
Access to finance remains an obstacle to investment
A significant share of firms are reluctant to apply for bank loans
Borrowing costs are relatively high
The debt recovery rate is low
The insolvency regime could be more efficient
Venture capital investments remain low
Regulatory settings are competition friendly overall
Mark-ups are relatively high in Latvia
Mark-ups are higher in sectors with many SOEs
The shortage of digital skills is severe
Skill mismatches are large
Relatively few firms are managed by professional managers
Participation in adult learning is low
Participation in active labour market policies is low
The quality of academic research can be improved
The research workforce is small
International collaboration in research is limited
There is little collaboration between SMEs and research institutions
Latvia is one of the largest recipients of EU funds