OECD Economic Surveys: Latvia 2017
Latvia’s economy has grown robustly in recent years on the back of a strong track record in implementing structural reforms, despite a challenging international environment. Rising wages have supported household consumption. After a severe setback in 2008-09, catch-up with higher income OECD countries may have resumed. Government finances are solid and financial market confidence in Latvia is strong. Private sector indebtedness is now lower than in many OECD economies. Export performance, including diversification of products and destinations, is improving, but Latvia’s participation in global value chains is modest. Latvia’s exports still rely heavily on low value-added, natural resource intensive products, reflecting in part skills shortages and weak innovation. Unemployment remains high, although it has fallen. Many young Latvians emigrate. Informal economic activity is still widespread.
High long-term unemployment, weak social safety nets and high labour taxes for workers on low pay contribute to widespread poverty. Many low-income households are inadequately housed. High out-of-pocket payments limit access of low-income households to health services. Improving access to housing, health care, education and training would improve economic opportunities for low-income households and requires additional government spending.
SPECIAL FEATURES : MOVING UP THE GLOBAL VALUE CHAIN; ECONOMIC AND SOCIAL INFRASTRUCTURE
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Basic statistics of Latvia, 2016
(Numbers in parentheses refer to the OECD average)
This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries. The economic situation and policies of Latvia were reviewed by the Committee on 22 May 2017. The draft was revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 14 June 2017.The Secretariat’s draft report was prepared for the Committee by Andrés Fuentes Hutfilter and Naomitsu Yashiro under the supervision of Asa Johansson, and the general supervision of Alvaro Pereira and Robert Ford. Statistical research assistance was provided by Eun Jung Kim and administrative support by Dacil Kurzweg.The Survey also benefitted from contributions by Raimonds Aronietis, Koen de Backer, Caroline Berchet, Konstantīns Beņkovskis, Thiago Chagas, Mátyás Viktor Farkas, Daniela Glocker, Marco Kools, Alain Lumbroso, Jaan Masso, Olaf Merk, Leo Mongendre, Oļegs Tkačevs, Zuzana Smidova, Priit Vahter, Gert Wehinger.The previous Survey of Latvia was issued in February 2015.