The site, business -friendly regulations, and skilled workforce make Latvia attractive foreign direct investment.
Despite the slow economy, Latvia places itself as a major portal of the European Union, where foreign capital flows to the main sectors, and modern reforms confirm its aspirations to become a center for investment in the Baltic.
GDP growth to create a 2.3 % GDP in 2025; 2.5 % in 2026; And 2.5 % in 2027. Latvia Bank, the central bank of the country, is more optimistic in 2026 and 2027, and is expected to grow by 3.1 % and 3.3 %, respectively, due to stronger local demand, decrease, and foreign capital flow to the Latvia sector, defense sectors and banking services.
The government’s decision in 2022 to simplify the rules and regulations that cover the operation of foreign companies and citizenship that bear fruit. It has positively reshaped Latvia’s ability to provide reinforced support packages for investors in the Baltic state.
| Biomedical statistics |
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| location: Northeast Europe |
| neighbor: Estonia, Russia, Belarus, Lithuania |
| Capital: Riga |
| Population (2024): 1.9 million |
| Official languages: Latvian (56.3 %), Russian (33.8 %), another 0.6 % |
| Capita GDP (2024): 22200 dollars |
| GDP growth (2024): 1.2 % |
| Inflation (2024): 1.4 % |
| currency: euro |
| Investment Enhancement Agency: LIAA Investment and Development Agency (LIAA) |
| Available investment incentives: Grants and financial incentives for local and foreign investors; VAT exemptions and various tax discounts of companies operating in the five Sezs in the country, including a free port; Loans for new companies and startups; There are no performance requirements for foreign investors to create, maintain or expand investment in Latvia |
| The rank of corruption perceptions index (2024): 38/180 |
| Political risks: The small open market economy is sensitive to external changes and shocks; Society and the economy are negatively affected by Russia’s invasion of Ukraine in 2022 and is still a continuous war, which caused the deterioration of relations with Russia; Questions about Latvia’s ability to generate sufficient tax revenues to enhance economic growth. |
| Security danger: Near Russia; The continuous Ukrainian conflict claims the stability of national security and economic growth in Latvia; A trivial crime of credit card, discount card and fraud on ATMs; Electronic attacks and extortion; Women’s harassment, LGBTQI+, and racist groups |
| Positives |
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| High digital, offensive tax, update, Baltic state learning within the European Union |
| Strong educational ethics, skilled workforce |
| An increased set of talents with IT skills |
| Low cost and tax -friendly for new local and foreign startups |
| A member of the European Union and NATO since 2004, the Schengen region since 2007 |
| He joined the euro area in 2014 and OECD in 2016 |
| A complete set of property rights |
| The Commercial Property Rights Agreement and the United States, and the World Trade Organization agreement on the aspects related to trade in intellectual property rights and other international agreements |
| cons |
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| The stability of the open small economy is subject to external factors such as the fluctuations of the supply chain in the main markets, the European Union, North America and Asia |
| Contransing can affect the sharp rise in commodity prices to grow in the national economy |
| Near Russia is a source of concern |
Sources: Platy Times; CIA World Factbook; Delphi Dina European Central Bank; International Monetary Fund; The Ministry of Defense, the Ministry of Economy, the Ministry of Finance, the State Statistics Office, the Tax Administration; Leah; Reuters trading economics; International Transparency TvNet.LV; The US State Department; The World Bank Review the world’s population.
For more information about Latvia, click here to read Global financing Country report page.
Specifically, Latvia hopes to build an international interest in the country through an ambitious project aimed at developing capital, Riga, as a low -cost low -cost Belcique Center. It also looks to artificial intelligence, Findte, smart consumer electronics, biomedic and pharmaceutical preparations.
Latvia expects distributions of profits from the largest commercial mission ever to the United States, in September 2024. led by Latvian President Edgar Renksins and Minister of Economy Victors Valends, the event that lasted for eight days included investor investors in Houston, San Francisco, and Denver. Meta, Google, Nasa, Groq and Openai executives held. Microsoft signed the Memorandum of Understanding in December to build an Amnesty International Center in Latvia. The commercial mission aims to double the value of Latvia’s exports to the United States to two billion dollars within three to five years.
Last April, the Latvia government agreed to amendments to the organization of the Coordination Council for large and strategic investment projects. The amendments submitted a more efficient decision -making process to examine financing requests and provide state support for projects with an investment volume of at least 10 million euros (about 10.5 million dollars) or the export volume of 5 million euros.
The country also generates a foreign investor interest in intensive capital projects. These rails in Tika include the most ambitious investment in the Baltic region in the regional transport infrastructure. The project includes building two European transport corridors (ETC). ETC1 will connect modern rail networks in Estonia, Latvia, Lithuania and Poland to the European continental rail transport system by 2030.
The international interest in the railway in Tikka has increased after the Baltic countries confirmed that the European Union confirmed that external investors may participate in ETC1 and ETC2 financing.
RAIL Baltica received an additional 1.4 billion euros from the European Union’s EU facility (CEF) in November. Up to 85 % of the project’s qualified costs are funded by CEF. In total, the project got more than 4 billion euros through CEF.
According to one of the analyzes, which was published last June, Rail Baltica offers regional economic advantages, direct and indirect, of 48 billion euros. This projection exceeds the total capital cost estimate of the project of 15.3 billion euros, which covers funding requirements for the implementation of the first project stage, which will create a STC operating line across the three Baltic countries to communicate with the rail network in Poland by 2030.
The potential value in the long -term value of the project for the security of the Baltic countries and Europe in ETC2, which aims to expand the scope of the integrated Baltic rail network to connect countries in the Baltic, Black and Sea neighborhood, with a railway connections extended to Ukraine and Moldova.
“Geopolitical transformations have mainly changed the way the project is seen – Baltica is now decisive in NATO, which increases its strategic importance,” says Marco Kevilla, the interim CEO of RB Rail, RAIL Baltica.
Magnet for foreign direct investment
In January, the Latvia government has approved more than 644 million euros in additional spending to enhance its Russian borders. The defense budget of 1.6 billion euros is 42 % for arms systems purchases. The plan is to raise the defense budget to at least 4 % of GDP in 2026.
The government also wants to be a pioneering banking center. In January, the government made a temporary solidarity contribution (TSC) to credit institutions to help cover national security costs. TSC is 60 % imposed on the excess of interest revenues in excess excess of the credit institution during 2025, 2026 and 2027. It is expected to raise $ 100 million.
The country’s foreign direct investment stock (FDI) increased by 4.4 % to $ 26 billion in 2024, which suffers from a stable monetary policy, modern infrastructure, and a useful geographical location between the European Union and the Commonwealth of Independent Countries. That year, investments from other European Union countries represented more than 82 % of all accumulated foreign investment. The division of foreign direct investment by sector reveals that most foreign entities invested in banking services, real estate, technical and manufacturing services.
“The results of the foreign Forex in 2024 were impressive – from less than 619 million euros in 2023, the amount of attractive investments last year grew to more than 655 million euros.” “The goal of Latvia (2025) for large investments is 790 million euros, and given the strong basis and increasing interest from investors, I am sure that we may go beyond this goal.”
The role of European Union financing continues to push innovation and growth between small and medium -sized companies that operate in sectors such as digitization, energy efficiency and exports.
In this year’s budget, the Ministry of Economy provides 250 million euros in financing the states and the European Union to assist small to medium -sized companies (SMES) to increase competitiveness. About 61 % of the funds are allocated to support small and medium companies.
Latvia witnessed that the volume of active investment projects is growing from more than 4 billion euros in 2023 to about 11 billion euros in 2024 with an increase in foreign investment.
Five special economic areas (Sezs), including two free outlets, offer tax and financial incentives necessary to attract foreign investors. SEZS offers up to 80 % on corporate income tax. Reducing discounts on property assets from the actual tax rate to 0.3 % for foreign and foreign institutions. Tax discounts will remain valid until 2035.
The country’s business -friendly policies and European Union membership generates increasing investments from Asia. Last year, the Indian Information Technology Group for Information Technology has opened the Baltic Business Treatment Services Center (BPS) in Riga, which led to the establishment of 500 jobs.
“We are in an important step in the Baltic growth strategy. Says Birendra Sen, head of BPS at Tech Mahindra, says Latvia provides an environmental system for vibrant technology, skilled workforce, strong information technology infrastructure, and favorable government policies.”
Likewise, Ozenvocom, the largest player in Uzbekistan in vital measurements and facial recognition techniques, chose Riga for its European headquarters. “The decision was not difficult.”. “We also want to consider the formation of close cooperation partnerships with private companies and private institutions in Latvia.”
Meanwhile, Latvia Bank is developing a strategy to convert Riga to the largest Fintech Center in Baltics. The central bank aims to a supportive approach to lottery, which aims to advance investment and growth within the Fintech community.
Latvia’s governor of Latvia Casins Casax said to Fintech Latvia in November 2024 in Riga:
“Our value proposal depends on a friendly and supportive ecosystem, which gives priority to reaching capital, developing global talents, and enhancing deeper cooperation with stakeholders to build a competitive position in Latvia.”
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