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

  • From a cyclical perspective, the recent rise in economic confidence and industrial production point to a growth pick up in H216, supported by recovering exports. Medium term, the solid business environment should ensure economic growth outperformance in a European context, in spite of the ongoing demographic decline.

  • Latvia's Short Term Political Risk score of 72.1 out of 100 is likely to remain above the eurozone average of 69.8, supported by strong policy continuity and social stability. The potential for Russian aggression remains the main political risk, as highlighted by the poor showing in the 'security/external threats' subcategory.

Major Forecast Changes

  • Real GDP growth came in at 2.1% y-o-y in Q116, with private consumption the main contributor to the headline figure. On a quarter on quarter annualised basis the figure came in at 1.6%, recovering from a mild contraction in Q415. Despite this rebound and our expectations for a continued recovery in H216, we have downwardly revised our 2016 growth forecast to 2.3% from 3.0% previously.

Key Risks

  • Over 50,000 Latvians are estimated to live in the UK and with the UK voting to leave the EU in June 2016, this poses question marks over the future right of these individuals to remain in the country, and could lead to a return of skilled labour to Latvia.

  • On the political front, relations with Russia will remain the major threat to Latvia's political stability.

Macroeconomic Forecasts (Latvia 2014-2017)
Indicator 2014 2015 2016f 2017f
National Sources/BMI
Real GDP growth, % y-o-y 2.4 2.7 2.3 3.2
Nominal GDP, EURbn 23.6 24.4 25.0 25.9
Consumer price inflation, % y-o-y, eop 0.3 -0.1 1.6 2.9
Exchange rate EUR/USD, eop 0.75 0.90 0.93 0.91
Budget balance, % of GDP -1.6 -1.3 -1.3 -0.9
Current account balance, % of GDP -1.6 -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
Severe Demographic Challenges Ahead
8
GDP By Expenditure Outlook
10
TABLE: GDP GROWTH FORECASTS
10
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
External Trade And Investment Outlook
12
Widening Current Account Deficit No Cause For Alarm
12
Outlook On External Position
13
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: EXPORTS
14
TABLE: IMPORTS
14
Fiscal Policy And Public Debt Outlook
15
Policy Continuity And Strong Growth Favour Fiscal Outlook
15
Structural Fiscal Position
17
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
17
Monetary Policy
18
Inflation To Accelerate From Q416
18
Monetary Policy Framework
19
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
Short-Term Stability Cannot Mask Demographic Decline
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Slower Growth And Ethnic Tensions Key Themes To 2025
25
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
37
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK
39
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Tentative Stability, But New Risks Emerging
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
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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