Latvia economy at a glance

Latest figures for Latvia: inflation, growth, interest rates, jobs, bond yields, debt and taxes. Updated 6 November 2026. Open Latvia on the interactive map →

Key figures

Indicator	Latest	Period	Previous
Inflation (consumer prices, year on year)	3.0%	October 2026	3.0% September 2026
Core inflation (excluding food and energy)	3.2%	October 2026	2.9% September 2026
Real GDP growth (year on year)	3.5%	Q2 2026	2.9% Q1 2026
Policy rate (European Central Bank)	2.50%	November 2026	2.50% October 2026
Unemployment rate	7.3%	September 2026	7.3% August 2026
10-year government bond yield	4.15%	September 2026	3.82% August 2026
Retail sales (year on year)	4.5%	September 2026	3.5% August 2026
Industrial production (year on year)	2.6%	September 2026	0.6% August 2026
House prices (year on year)	11.4%	Q2 2026	10.3% Q1 2026
Stock market (OMX Riga (OMXRGI))	992	November 2026	+7.3% over 12 months

Questions and answers

What is the inflation rate in Latvia?

Latvia's annual inflation rate was 3.0% in October 2026, unchanged from September 2026.

What is the interest rate in Latvia?

The European Central Bank deposit facility rate is 2.50% (as of November 2026). The next rate decision is due on 17 December 2026.

How fast is Latvia's economy growing?

Latvia's real GDP grew 3.5% year on year in Q2 2026. The IMF's October 2026 World Economic Outlook forecasts growth of 2.3% in 2026 and 1.8% in 2027.

What is the unemployment rate in Latvia?

Latvia's unemployment rate was 7.3% in September 2026, unchanged from August 2026.

What is Latvia's 10-year government bond yield?

Latvia's 10-year government bond yield averaged 4.15% in September 2026.

How much government debt does Latvia have?

Latvia's government debt is about 46.2% of GDP (latest annual figure), with a budget deficit of 2.5% of GDP.

What is Latvia's credit rating?

Latvia's sovereign credit ratings: S&P A, Moody's A3, Fitch A-.

What is the VAT rate in Latvia?

Latvia's standard VAT rate is 21% (2026 rules).

What is the corporate tax rate in Latvia?

Latvia's corporate income tax rate is 20.0% (2026 rules).

Who leads Latvia?

Latvia is led by Andris Kulbergs (United List), Prime Minister; head of state President Edgars Rinkēvičs. Next election: New government being formed after the 3 Oct 2026 Saeima election: President Rinkēvičs formally nominated Kulbergs as prime minister on 4 Nov 2026, and he aims to present a government by 18 Nov. Next regular election due in 2030.

Outlook

Growth has firmed to about 3% y/y (Q2 2026), with house prices up more than 11% and HICP inflation steady around 3%. No fresh institutional forecast was retrieved for this pass. Upside risks are EU-funded investment, including Rail Baltica and the Riga airport rail link, and defence spending. Downside risks are a protracted coalition formation that delays the 2027 budget, higher ECB rates and bond yields (10y above 4% in September), energy prices and security incidents on the eastern border.

Why Latvia matters for the world economy

Latvia's influence abroad is limited and mostly regional. It is a NATO frontline state bordering Russia and Belarus, it is exposed to drone incursions and hybrid pressure, and it is a transit corridor (Riga port, Rail Baltica) for the eastern flank. Its trade is concentrated on Lithuania and Estonia, its forest-product exports go to Nordic and western European markets, and Nordic-owned banks dominate its finance, so shocks pass mostly between it and its Baltic and Nordic neighbours. The political transition after the October election matters chiefly for Baltic defence coordination and EU-funds absorption.

Politics

Kulbergs became prime minister in May 2026, after a crisis over the handling of stray drones brought down Evika Siliņa's coalition. His United List then won the 3 October election with about 35% of the vote and 41 of 100 seats. The other parties to enter the Saeima were Latvia First (17), Sovereign Power (15), National Alliance (10), Progressives (10) and New Unity (7). After the new Saeima first met on 3 November, President Rinkēvičs formally nominated Kulbergs as prime minister on 4 November. Kulbergs has held talks with National Alliance and New Unity (the three parties would have 58 seats), aims to present a government by 18 November and does not rule out a minority cabinet. He says clarity on the 2027 budget may come only in mid- or late January, at a time of heavy defence spending and a current-account deficit of about 5% of GDP.

System: Unitary parliamentary republic.

Economy and taxes

GDP: US$49 billion
Population: 1.9 million
Government debt: 46.2% of GDP
Budget balance: −2.5% of GDP
Current account: −5.3% of GDP
Exports: 62.6% of GDP
Main exports: Wood and timber products, electrical equipment and machinery, metals, food and beverages (incl. spirits), cereals, pharmaceuticals; transit and logistics services
Top export markets: Lithuania (18.5%), Estonia (11.4%), Germany (6.7%), United Kingdom (5.4%), Sweden (5.2%)
IMF growth forecast: 2.3% in 2026, 1.8% in 2027
IMF inflation forecast: 3.6% in 2026, 3.9% in 2027
Currency: EUR
Freelancer tax: A self-employed person earning the average wage (EUR 21,780 a year) pays about 32.0% of it in income tax and social contributions (2026 rules)
Top income tax rate: 36.0%
Gold reserves: 6.7 tonnes (July 2026)
Energy self-sufficiency: 18% (2024)

Recent news

4 November 2026 Kulbergs formally nominated as prime minister; 2027 budget may wait until January LSM
President Rinkēvičs formally nominated United List leader Andris Kulbergs as prime minister after the new Saeima's first sitting. Kulbergs aims to present a government by 18 November, does not rule out a minority cabinet, and said clarity on the 2027 budget may come only in mid- or late January.
4 November 2026 EU approves Latvia's final €504m recovery fund payment LSM
The European Commission approved Latvia's fifth and final Recovery Fund payment request of €503.7m after the country met 25 milestones and 31 targets. The money covers projects such as rail electrification, Riga electric buses and power grids, and should reach the state budget by year-end.
4 November 2026 Latvian industrial output rises 2.6% in September LSM
Industrial output was 2.6% higher than a year earlier and 0.6% up on August, the Central Statistical Bureau said. Manufacturing grew 5.2%, led by chemicals and machinery, while electricity and gas supply fell 18.9%.
30 October 2026 Heating bills set to rise in many Latvian towns as fuel costs surge LSM
The utilities regulator approved higher heating tariffs for 13 suppliers from 1 November, in towns including Jelgava, Valmiera and Jūrmala. It blamed wood pellet prices that have at times doubled or tripled, wood chips up more than 80% and the highest gas prices in recent years.
23 October 2026 Latvia has the EU's second-highest income inequality LSM (Eurostat data)
Eurostat data put Latvia's Gini coefficient at 35.6 in 2025, behind only Bulgaria (37.7) and well above the EU average of 29.2. Lithuania was close behind at 35.5, while Estonia was at 30.9.
20 October 2026 Kulbergs schedules coalition talks with his current partners LSM
The prime minister will meet the National Alliance and New Unity on 28 October and also plans meetings with other parties. Options range from a two- or three-party coalition to a minority government of experts.

Headlines and summaries are compiled daily from the linked reports with AI assistance.