Latvia Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Latvia Country Risk Report
Product Price
$1,195.00

Core Views

  • Latvia's economic recovery will remain broadly on track in 2016 and 2017, as improving labour market conditions feed through into steady private consumption growth.

  • We forecast real GDP growth to expand by 2.9% in both years, but caution that the economic outlook will sour over the next decade due to the country's dire demographic profile.

  • Policy continuity and strengthening economic growth will ensure a narrowing of Latvia's fiscal deficit and see a reduction in the general government debt as a share of GDP, despite rising defence spending over the coming years.

  • Although Latvia's current account deficit will widen, it will remain much smaller than its pre-crisis levels and will pose less of a threat to financial stability in the country.

  • Inflationary pressures will accelerate with rising global oil prices from Q416, but are unlikely to pose any threats to the country's economic growth outlook.

Major Forecast Changes

  • We have modestly revised down our real GDP forecasts to 2.9% in both 2016 and 2017, from 3.0% and 3.3% previously.

  • This reflects even weaker economic growth outlooks in key trading partner Russia and the two other Baltic nations.

Key Risks

  • Over 50,000 Latvians are estimated to live in the UK. Although not our core view, a UK vote to leave the EU in June 2016 would pose question marks over the right of these individuals to remain in the country.

  • Some of the Latvians could eventually be forced to return home, reducing an important source of remittance income but also boosting the country's depleted working age population.

Macroeconomic Forecasts (Latvia 2014-2017)
Indicator 2014 2015 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 2.4 2.7 2.9 2.9
Nominal GDP, EURbn 23.6 24.4 25.6 27.5
Consumer price inflation, % y-o-y, eop 0.3 -0.1 1.6 2.9
Exchange rate EUR/USD, eop 0.82 0.92 0.91 0.87
Budget balance, % of GDP -1.6 -1.3 -1.3 -0.9
Current account balance, % of GDP -1.5 -1.1 -1.4 -2.0
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Robust Growth Despite Trade Weakness
8
TABLE: GDP BY EXPENDITURE
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
External Trade And Investment Outlook
12
Trade Suffering From Deteriorating Russian Demand
12
TABLE: CURRENT ACCOUNT
13
Outlook On External Position
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: EXPORTS
15
TABLE: IMPORTS
15
Monetary Policy
16
No Inflation Across H116
16
TABLE: MONETARY POLICY
16
Monetary Policy Framework
17
Fiscal Policy And Public Debt Outlook
18
Government Collapse Should Not Affect Fiscal Outlook
18
TABLE: FISCAL POLICY
18
Structural Fiscal Position
19
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
20
Chapter 2: 10-Year Forecast
21
The Latvian Economy To 2025
21
Looking For A 'New Normal'
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Straujuma Resignation: Key Implications
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
26
Slower Growth And Ethnic Tensions Key Themes To 2025
26
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: DEVELOPED STATES - LABOUR MARKET RISK
30
TABLE: DEVELOPED STATES - LOGISTICS RISK
34
TABLE: DEVELOPED STATES - CRIME AND SECURITY RISK
36
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK
39
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Downside Risks Gather Momentum
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

Assess your risk exposure in Latvia with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Latvia with confidence.

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