Latvia’s economic growth has been one of the most rapid among European Union member states in recent years. GDP growth rate was 4.4% in 2011-2014. In 2015, in spite of geopolitical instability, Latvia’s GDP continued to grow and reached 2.8%.
Latvia’s economic development is closely tied to global developments. The situation on Latvia’s most important export market – Europe – is gradually improving. Exporters who mainly focus on eastern markets are affected by the poor economic situation in Russia. In spite of the fact that the geopolitical tension makes it difficult for Latvia’s economy to grow, GDP growth may turn out faster than the year before and reach 3.2%, as reported by Economy Ministry.
For a more rapid improvement of competitiveness of Latvian companies, it is first necessary to find effective ways of enhancing knowledge in economic development, raising competitiveness of exporting companies, raising productiveness, innovations and their capacity, as well as continue the process of reformation to improve the business environment, notes the ministry.
The 2014-2020 EU fund planning period opens the way for investing EUR 4.4 billion into Latvia’s growth and development. Economy Ministry’s activities will have access to only approximately EUR 770 million for specific investments into modernization and industrialization of Latvia’s economy.
To encourage entrepreneurs to invest in new, lucrative products and services, it is necessary to preserve existing and create new tax stimuli. It is planned to develop a legislative draft to support beginner entrepreneurs with a special tax regime in early stages of business development, as well as add amendments to regulations in regards to the adoption of a special tax regime for small and micro-enterprises with low annual turnover, the ministry notes.
In the latest Doing Business study by the World Bank, Latvia was put on the 22nd spot among 189 countries. The World Bank has recognized Latvia as one of the TOP 30 leaders that have successfully realized reforms to improve the business environment. The future of Latvia’s business environment will depend on the quality and realization speed of reforms. Latvia’s goal is to be in the TOP 10 among countries of the world in terms of positive business environment rating, notes the ministry.
Over the course of 2015, Latvian government reviewed regulations of the Construction Law in 2015 and continued working on construction rules. The Construction State Control Bureau also started working that year.
Integration of Latvia’s energy market into Europe continues. 2015 was the first year under conditions of free competition for the country’s energy market. Further liberalization of the gas market remains on the government’s agenda. The Cabinet of Ministers has viewed the amendments to the Energy Law, which the Saeima plans to approve at the beginning of 2016.
In addition, improvements to Latvia’s energy market regulations continue and work continues to develop the electrical energy and natural gas infrastructure to help further enhance the country’s energy security and diversify energy supplies.