The Latvian economy contracted with significant disinflation against the backdrop of geopolitical headwinds. Persistent services inflation, driven by strong nominal wage growth amid tight labor markets, keeps core inflation elevated. Productivity growth has failed to match real wage increases, weighing on competitiveness. The economic consequences of Russia’s war in Ukraine continue to depress private investment and productivity, thus compromising further Latvia’s lagging income convergence. The government needs to address long-term spending pressures related to its priorities and multiple transitions around climate change and energy, aging and skilled labor shortages, and rising defense costs. The coalition’s priorities include managing the fallout from the war in Ukraine, ensuring energy independence, addressing social issues, and pursuing tax reform.
- Format
- Paper
- Frequency
- regular
- ISBN
- 9798400287800
- ISSN
- 1934-7685
- Pages
- 79
- Published in
- United States of America
- Series
- Country Report No. 2024/284
- StockNumber
- 1LVAEA2024001
Table of Contents
- FUND RELATIONS 76
- Projected Payments to Fund: 76
- Exchange Rate Arrangement: 77
- Previous Article IV Consultation: 77
- Safeguards Assessment: 77
- FSAP Participation and ROSCs: 77
- SR.pdf -1
- CONTEXT -1
- RECENT DEVELOPMENTS -1
- OUTLOOK AND RISKS -1
- POLICY DISCUSSIONS -1
- A. Fiscal Policy: Balancing Risks While Creating Fiscal Space -1
- B. Financial Sector Policies: Balancing Risks and Resilience -1
- C. Structural Policies to Enhance Productivity and Resilience -1
- Climate Change Policy and Energy Security -1
- STAFF APPRAISAL -1
- A. Overview -1
- B. Funding -1
- C. Conclusion -1
- Reference -1
- SR.pdf -1
- CONTEXT 10
- RECENT DEVELOPMENTS 11
- OUTLOOK AND RISKS 15
- POLICY DISCUSSIONS 17
- A. Fiscal Policy: Balancing Risks While Creating Fiscal Space 18
- B. Financial Sector Policies: Balancing Risks and Resilience 23
- C. Structural Policies to Enhance Productivity and Resilience 26
- Climate Change Policy and Energy Security 29
- STAFF APPRAISAL 31
- A. Overview 71
- B. Funding 72
- C. Conclusion 73
- Reference 74
