According to Swedbank, the Latvian economy will show growth of 2.2% in 2025, and in 2026 the pace will accelerate to 2.8%. After a 0.2% decline in GDP in 2024, signs of recovery appeared by the end of the year, which creates positive expectations for the next period.
The main drivers of growth will be an increase in exports, growth in household consumption, and increased public investment.
The labor market in Latvia remains stable: the unemployment rate continues to decline, and wages are growing, although the rate of increase is slowing. Inflation in 2025 is projected at 2.6%, which is moderate.
One of the key challenges for the economy remains the implementation of projects funded by the EU’s Recovery and Resilience Facility (RRF). All planned projects are due to be completed by mid-2026, and their successful implementation could be a catalyst for further economic growth.
