Latvia is located in the Northern Europe and is bordered by Estonia, Lithuania, Russia and Belarus. Latvia’s land area is around 64,589 square km and has the country has a temperate climate. Being on the East European plains, the land is pretty fertile and is largely covered by forests.
Latvia has one of the highest GDP growth rates in Europe. However, the growth was spurred by rich consumption. This triggered a major landslide in growth when the recession marred years saw a decrease in demand. The Latvian economy fell 18% in the first quarter of 2009. The economy faced the worst impact in the EU.
Latvia Economy: Overview
Recession brought in the worst for Latvia’s economy, with a nearly 18% decline in the GDP. The IMF and EU bailed the country out of a serious situation, helping to decrease the fiscal deficit to 5% of the GDP. Most banks, companies and real estate firms have been privatized in Latvia, although there still is a need to fight the budget deficit that is increasing at a fast pace.
Amidst all this, the service sector remains the most active contributor of the national GDP, accounting for almost 72.4% of the GDP. The industry sector contributes almost 24% of the national GDP and agriculture sector chips in with 3.6%.
According to the 2009 figures, Latvia’s GDP (purchasing power parity) was $32.4 billion, which was significantly lower than the 2008 figure of $39.42 billion and the 2007 figure of $41.32 billion.
The growth rate from 2007 to 2009 was as follows:
The GDP per capita decreased as well, coming in at $14,500 in 2009, down from 2008 figure of $17,600 and 2007 figure of $18,300.
The unemployment rate, however, soared to 16.6%, whereas it had been well under the two digit range at 7.5% in 2008. Public debt increased from 19.5% (2008) to 32.5% in 2009. The only growth, aided by the IMF and EU, seemed evident in Latvia’s current balance, with figures moving from -$4.492 billion in 2008 to $1.64 billion in 2009.