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This Survey is published under the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Latvia were reviewed by the Committee on 8 April 2019. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 9 May 2019.The Secretariat’s draft report was prepared for the Committee by Naomitsu Yashiro and Caroline Klein under the supervision of Nicola Brandt. The Survey also benefitted from consultancy work by Olga Rastrigina and Ania Thiemann and joint research with Konstantīns Beņkovskis and Oļegs Tkačevs. Statistical research assistance was provided by Corinne Chanteloup and editorial support was provided by Elisabetta Pilati. The previous Survey of Latvia was issued in September 2017.Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys.
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The economy is in a broad-based upswing led by domestic demand. Fast earnings increases are supporting private consumption. A strong rebound of investment pushed GDP growth rates above 4% in 2017 and 2018. GDP growth is expected to slow to around 3% in 2019 and 2020, as world trade weakens and investment slows to a more sustainable pace.
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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 sound macroprudential policy.
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