1.
December 2022
Latvia's Macro Profile
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2.
Latvijas Banka has revised its macroeconomic forecasts
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Key points:
• The baseline scenario of Latvijas Banka’s forecasts remains unchanged from the September forecasts
and provides for a temporary and shallow recession in Latvia’s economy.
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• Inflation remains high, and the assumptions concerning the growth of the global food prices and
domestic wages used in Latvijas Banka’s forecasts have been revised upwards.
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In response to the soaring inflation, major global central banks, including the European Central Bank
(ECB), are raising their monetary policy rates. From March 2023 onwards, the ECB will start gradually
reducing the asset purchase programme (APP) portfolio:
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With energy prices normalising, inflation in Latvia is expected to subside. The rise of the global food prices
and wages, however, could be more pronounced and sustain a higher inflation than previously estimated:
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Latvia's Economic Developments and Outlook
Latvia's Macro Profile, December 2022

3.
Latvia's Economic Developments and Outlook
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Weak development of Latvia’s economy was expected in the third quarter, and the economic outlook
has remained broadly unchanged in comparison with September:
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Although the end of the year and the beginning of next year in Latvia’s economy will be marked by a
recession, this recession is expected to be temporary and shallow:
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Timely, targeted, proportionate and limited in time government support in the crisis; at the same time,
focus on structural changes in energy sector:
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Latvia's Macro Profile, December 2022

4.
Macroeconomic Data
Macroeconomic indicators: Latvijas Banka's projections
2022 2023 2024 2025
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Latvia's Macro Profile, December 2022
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5.
Foreign Direct Investment
Latvia's Macro Profile, December 2022
FDI inflows in Latvia
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Breakdown by sector
Other
GB
DE
NL
LT
SE
EE
LU
RU
Total
Breakdown by country
Source: Latvijas Banka.
Other sectors
Professional, and technical activities
scientific
Transportation and storage
Real estate activities
Manufacturing
nformation and communication
Financial and insurance activities
Wholesale and retail trade
Total
–3000
–2000
–1000
0
1000
2000
3000
4000
5000
6000
2018 2019 2020 2021 2022 9M
–2000
–1000
0
1000
2000
3000
4000
5000
2018 2019 2020 2021 2022 9M

6.
Macroeconomic Indicators: Latvia, Lithuania and Estonia
Latvia's Macro Profile, December 2022
Latvia
Lithuania
Estonia
Real GDP
(%; year-on-year)
Unemployment rate
(% of economically active population)
Source: Eurostat. Forecast: OECD.
Latvia
Lithuania
Estonia
Source: Eurostat. Forecast: OECD.
Inflation rate
(%; year-on-year)
Source: Eurostat. Forecast: OECD.
Latvia
Lithuania
Estonia
–4
–2
0
2
4
6
8
10
2018 2019 2020 2021 2022 F 2023 F
–5
0
5
10
15
25
2018 2019 2020 2021 2022 F 2024 F
4
5
6
7
8
9
2018 2019 2020 2021 2022 F 2024 F
2024 F
20
2023 F
2023 F

7.
Macroeconomic Indicators: Latvia, Lithuania and Estonia
Latvia's Macro Profile, December 2022
Gross government debt
(% of GDP)
Latvia
Lithuania
Estonia
FDI inward flows
(% of GDP)
Sources: Eesti Pank, Lietuvos bankas and Latvijas Banka.
Latvia
Lithuania
Estonia
Government budget balance
(% of GDP)
Latvia
Lithuania
Estonia
0
10
20
30
40
50
60
2018 2019 2020 2021 2022 F 2024 F
–8.0
–7.0
–6.0
–5.0
–4.0
–3.0
–2.0
–1.0
0.0
1.0
2018 2019 2020 2021 2022 F 2024 F
0
2
4
6
8
12
Source: Eurostat. Forecast: OECD.
Source: Eurostat. Forecast: OECD.
2023 F
2023 F
10
2018 2019 2020 2021 2022 9M
(Lithuania 2022 1H)

8.
Latvia's Macro Profiile, December 2022
Macroeconomic Indicators: Latvia, Lithuania and Estonia
Adjusted* loans to euro area
non-financial corporations and
interest rates on new euro loans
(%; year-on-year)
Sources: ECB, Latvijas Banka, Eesti Pank and Lietuvos bankas.
* The effect of reclassifications and other adjustments have been deducted.
Loans to non-financial corporations – Latvia
Loans to non-financial corporations – Estonia
Loans to non-financial corporations – Lithuania
Interest rate on loans to non-financial
corporations – Latvia (weighted average;
right-hand scale)
Interest rate on loans to non-financial
corporations – Estonia (weighted average;
right-hand scale)
Interest rate on loans to non-financial
corporations – Lithuania (weighted average;
right-hand scale)
FDI inward stocks
(% of GDP)
Latvia
Lithuania
Estonia
Sources: Eesti Pank, Lietuvos bankas and Latvijas Banka.
0
20
40
60
80
100
120
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
–15
–10
–5
0
5
10
15
20
2018 2019 2020 2021 2022 10M
2018 2019 2020 2021 2022 9M
(Lithuania 2022 1H)