BalticExport 2019 english version by Abc.lv

2019

TABLE OF CONTENTS About Baltics

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About Latvia, Lithuania, Estonia .................................................................................................... 4 After a record-breaking year, export is expected to slow down.................................................................................................... 8 Brexit postponement gives a moment of breath, the impact on export will still be visible .......................................................................... 10 Baltic export continue to grow, further development is moderate ............................................................................................. 12 Latvian economy overview ................................................................................................................ 13 LATVIAN COMPANIES BY BRANCHES:

Agriculture, forestry and fishing Manufacturing

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Manufacture of food, beverages and tobacco products ................................................................................................................................................ 27 Manufacture of textiles and leather products, clothing ........................... 28 Manufacture of wood products, paper and their equipment....................................................................................................................................... 32 Manufacture of chemical products, rubber and plastic products ...................................................................................................................................... 40 Manufacture of basic metals, metal products and equipment ....................................................................................................................................................... 42 Manufacture of electronic and optical products, machinery n.e.c. .................................................................................................................. 47 Other manufacturing..................................................................................................................................... 48

Utilities, waste management

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Building and civil engineering Sale and distribution

Transport, warehousing and support activities for transportation

Art, entertainment, hospitality and catering

Finance and insurance

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Health care, pharmaceuticals, social services

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1st cover photo: www.shutterstock.com Published by Latvijas Tālrunis Ltd Blaumaņa iela 38/40, Rīga, LV 1011 Phone: +371 67770711, fax: +371 67770727 “Baltic Export” annual book issued in cooperation with Nozare.lv – LETA business portal and Firmas.lv Ltd

Reforms implemented in the past and close cooperation with businessmen have also helped Latvia achieve great results in international ratings, namely, in the World Bank’s Doing Business 2019 report Latvia is ranked 19th out of 190 countries, and 7th among the European Union member states – one place up from last year. Taking into account challenges related to international competitiveness as well as problems identified by companies, we will continue to implement long-term measures for economic development in order to create a competitive business environment in Latvia, which is also appreciated by investors. To this end, we have defined six priorities for further development of the business environment: ● Customer-oriented public administration ● Digitization of services ● Competitiveness of the tax system ● Openness of the business environment ● Rule of law ● Promoting innovation

Minister of Economics RALFS NEMIRO’S introduction to Baltic Export publication The declaration of the Cabinet of Ministers of Arturs Krišjānis Kariņš includes measures to create the best business environment in the Baltic countries, easing bureaucratic procedures for small and medium-sized enterprises, and reducing administrative burden while creating a motivating environment for paying taxes. In order to provide entrepreneurs with an increasingly attractive business environment and in order to attract investment, the Ministry of Economics, in cooperation with various state institutions and non-governmental organizations, is constantly working on the development and implementation of measures for improving the business environment. Export promotion is also one of our priorities this year.

Steady economic growth continues in Latvia, and Latvia’s growth is faster than the European Union average. Between 2011 and 2018, gross domestic product was growing by 3.6% annually on the average, while in 2017 and 2018, growth further accelerated. In 2018, gross domestic product increased by 4.8%, the fastest increase over the past seven years. Increasing household consumption and investment amounts contributed the most to growth last year. Thanks to increasing employment and remuneration, private consumption rose by 4.5% in 2018, the fastest growth since 2014. After a downturn or stagnation in 2013-2016, investment amounts have been rising: by 13.1% in 2017 and by 16.4% in 2018. Foreign direct investment in Latvia also increased, amounting to EUR 650 million or 2.4% of gross domestic product in 2017, and to EUR 744 million or 2.5% of gross domestic product in 2018. One of my most important priorities as the Minister of Economics is to achieve an increase in export, and I am pleased to see that export volumes are growing and export is one of the main drivers of economic development. In 2018, exports grew by 1.8%, including a 1.5% increase in export of goods. Wood and articles of wood were the most exported commodity. Export of machinery and equipment, iron and steel products, as well as vehicles also increased significantly. Export of services grew by 2.7% in 2018, mainly driven by income from exports of tourism and information and communication services. The share of Latvian exports in the global market is growing, which shows that Latvian entrepreneurs remain competitive and expand into new markets.

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continues developing, export volumes are increasing, ever new and innovative products are being introduced. However, estimates suggest that, only if “the old” Europe starts stagnating, while we continue the existing growth (which, however, is not a realistic scenario), we will be able to live as well as, say, in Denmark, only in about a decade. Is there a cure for that? Of course, because it is specifically the promotion of export, the creation of products and services with high inherent added value, the geographical location and other benefits that will provide a cure for Latvia. The LCCI is working industriously to offer its members utmost useful tools to foster co-operation abroad. Firstly, outgoing missions or trips are regularly organised to countries that are identified as target markets, for instance, Scandinavian countries, Russia, Belarus, Poland, Ukraine, Hungary, as well as countries further afield, like Egypt, Qatar, Japan, among others. Businesses gladly enjoy this service offered by the LCCI, so that, when they go on a visit, they already know who their potential interested co-operation partners are, thus they can “get straight to the point”.

President of the Latvian Chamber of Commerce and Industry AIGARS ROSTOVSKIS: export – the cure for Latvia

Likewise, the association has been co-operating with embassies of a number of countries and the Ministry of Foreign Affairs, so that entrepreneurs, who have come to Latvia as a part of delegations, could meet with local businesses and get to know industries they are interested in. This is also an opportunity to meet export partners! This year alone, meetings have taken place with Ukrainian and Czech, as well as Estonian, Peruvian and other delegations.

The LCCI makes sure that our members or businesses obtain the necessary information about specific countries and possible forms of co-operation, therefore, a broad network of representatives has been set up across the globe. Furthermore, educational seminars are organised about such topics as customs, taxation, marketing, legal matters, dispute resolution, financial planning, among many others. These benefits are available to all LCCI members, in order to better understand the target country’s approaches and For many years now, the Latvian Chamber of Commerce and support offered. Industry, which is the largest association uniting businesses in Latvia, has defined export support as one of the key directions, For several years now, Latvia has no longer been a country ofbecause each and every euro brought in from abroad strengthens fering cheap labour force, where, by setting up a factory, you can our economy, ensuring better standard of living. I am certain that produce cheap goods and pay low wages. This is the home of clever, the key is in how purposefully we develop export and increase industrious and well-educated people, who strive for prosperity. productivity or rather – the more focused we are on the promotion This is why the vision of the LCCI for 2030 is that Latvia must be a of sale of products and services abroad, by investing available place that attracts talents. If we do everything to achieve it, then we financial resources in a clever way, the sooner we will be able to will not blend with the background of the world, thereby proving that we can create products and services with a high added value achieve prosperity. to be exported across the world. Statistically, Latvia, for several years now, has been looking very well on the background of the European Union on the whole, And one more thing: at this time, LCCI members are already because the domestic product keeps growing, the economy exporting to 109 countries! Become one of us and one of them!

About Latvia

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POLITICAL SYSTEM • Latvia is a parliamentary democracy, where the president is the head of state, while the prime minister and Cabinet of Ministers hold executive power. • The highest legislative power is the parliament (Saeima), which is made up of 100 members, who are elected to four-year terms. Parliament members are elected by proportional representation from party lists by popular vote. • The main players of Latvian politics is made up of centre and centre-right parties, however, the influence of left-orientated parties has increased the past several years. Seven political parties have been voted into the current parliament. Local government members are voted in every four years. The previous parliamentary elections took place on October 6, 2018, while the next local government elections was held on June 3, 2017.

The Republic of Latvia is located in northeast Europe on the coast of the Baltic Sea. Latvia is bordered to the north HISTORY with Estonia, to the east with Russia, to the southeast with • The current territory of Latvia has been inhabited since 9,000 B.C. In approximately 2000 B.C., the first Baltic tribes Belarus and to the south with Lithuania. The total stretch began to inhabit the territory. The Latvian language belongs of Latvia’s land-borders is 1369 kilometres. The country’s to the Baltic language branch of the Indo-European tree family. Due to its strategically advantageous position on the Baltic Sea, coastline is 498 kilometres.

LATVIA’S ECONOMY • During the1990s, Latvia created a functional free-market economy, which has been a crucial pre-condition for economic growth. • The country’s economic development priorities are largely based on its geographical position in the middle of the Baltic States, as well as being a “gateway” between Eastern and Western markets. • Latvia is a member of the world’s most important international organizations, which guarantee political and economic stability for investors. • Latvia’s most important foreign trade partners are Estonia, Sweden, Russia and Germany (Central Statistical Bureau of Latvia, 2018). • In 2008, a serious economic crisis hit Latvia. As a result, the country’s healthcare, education and welfare budgets were substantially reduced. At the end of the year, international lenders agreed to loan Latvia EUR 7,5 billion, but only EUR 4,5 billion of these available funds were borrowed by Latvia. • As Latvia’s economy grew in 2013, there was an increased demand for the workforce, while unemployment also continued to drop. • The fastest growing and most competitive industries in the Latvian economy include forestry, construction, manufacturing (food, chemical and pharmaceutical industries, organic food production, wood processing, mechanical engineering, metalworking) and transportation and storage services, as well as information technologies (Central Statistical Bureau of Latvia, 2018). • In 2018, Latvia experienced the fastest pace of economic development in comparison with other EU Member States. • In 2018, Latvia ranked 28th in the index of economic freedom, while among the EU member states – 16th (Index of Economic Freedom, 2018) • Riga International Airport has the largest air traffic network in the Baltics, and is the region’s hub.

MEMBERSHIP OF INTERNATIONAL ORGANIZATIONS • September 10, 1991..................................................................... OSCE • September 17, 1991................................................ the United Nations • October 14, 1991 ..................................................................... UNESCO • February 10, 1995 .............................................. the Council of Europe • February 10, 1999 ..................................the World Trade Organisation • March 29, 2004 ............................................................................ NATO • May 4, 2004 ........................................................... the European Union • December 21, 2007 ................................................the Schengen-zone • October 19, 2008 .......... the International Organisation of Frankofonia • January 1, 2014 ....................................... a member of the euro-zone • July 1, 2016 .................................................................................. OECD

Latvia has endured multiple conquests in its history. The territory of modern day Latvia has been at one time or another part of the Polish, Russian, Swedish and German empires. • After hundreds of years of being occupied by foreign powers, the independent and democratic Republic of Latvia was proclaimed on November 18, 1918. However, on June 17, 1940, Latvia was occupied by the Soviet Union. On August 5, 1940, the territory of Latvia was incorporated into the Soviet Union. In 1941 and 1949, almost 60,000 persons were deported from the territory of Latvia to Siberia by the Soviet regime. In their place, residents from all over Russia were then brought into Latvia in a gradual and deliberate campaign of Russification. This substantially changed the ethnic and social makeup of the territory of Latvia – 77% of the country’s residents were ethnic Latvians in the 1930s, but this number reduced to only 52% by 1989. • On May 4, 1990, a declaration of the restoration of Latvia’s independence was passed, which foresaw the “de facto” independence of Latvia. The Republic of Latvia restored full independence on August 21, 1991.

NATURE • Latvian residents are extremely proud of their nature, which can be seen in all of its splendour in the many national parks and nature reserves throughout the territory. • Latvia’s main natural resource is its forests – about 52% of the country’s territory or 3,383 square kilometres is covered in forests. 67% of the trees growing in Latvia are coniferous, while 33% are deciduous. • Latvia’s white sandy beaches also ensure the country’s status as a Baltic coastal resort country. Latvia also has about 3,930 lakes scattered throughout the country. • Latvia has a well-kept and clean environment, which is a big reason for the country’s abundant flora and fauna. There are over 27,000 animal and plant species registered in Latvia.

CULTURE AND SPORTS • Riga is a historic city and a former member of the Hanseatic League, which is famous for its Art Nouveau architecture. It is the largest city in the Baltics and has been included on UNESCO’s World Heritage list. In 2001, the Latvian capital celebrated its 800th anniversary, and it was the European Capital of Culture in 2014. • Latvians can be proud of their cultural heritage – once every five years, tens of thousands of choirs, singers and folk dancers from every region flock to Riga to participate in the Latvian Song and Dance Festival. The country’s folklore heritage, collected in the famous Cabinet of Folksongs, has also been included in UNESCO’s Memory of the World Registry. Meanwhile, residents and guests of Riga have been known to frequent the many theatre, opera, ballet and musical performances that take place in the city.

About Latvia • In the classical music scene, Latvia’s global image is heightened by such international classical music stars as conductors Andris Nelsons and Mariss Jansons, opera singers Elīna Garanča, Inese Galante and Kristīne Opolais, one of the world’s best tenors Alexander Antohnenko and pianist Vestards Šimkus. Furthermore, the internationally-acclaimed Latvian theatre director Alvis Hermanis has been recognized as one of the best in the business. • Latvia is also known for producing many top-quality athletes – BMX rider Maris Strombergs is a two-time Olympic champion, winning the gold at the Beijing and London Olympics. Latvian Martins Dukurs is one of the best skeletonists in the world – during 2009-2016 he won the first place in World Cup, won nine gold medals in European Championship 20102018. In 2010 and 2014, he took second place in the Olympic Games. Six Latvian basketball players have played in the NBA – Gundars Vetra, Andris Biedrins, Kristaps Porzingis, Davis Bertans, Radions Kurucs and Dairis Bertans. • Latvia has also achieved great success in tennis thanks to Alona Ostapenko, who in 2017 became Latvia’s first tennis player, won or reached the final Grand Slam single-player tournament in France, and Ernests Gulbis, who won the first place in ATP (Tennis Professional Association) tournaments in 2010, 2011 and 2013. Latvia is also proud of its achievements in boxing, won by Latvian boxer Mairis Briedis, becoming the Baltic and World Champion in the heavyweight WBC (World Boxing Council) version and gaining several victories at the IBA (International Boxing Association) as well as winning the Intercontinental Champion title IBF. In total, Mairis Briedis has gained 25 victories and only one loss during his boxing career.

GENERAL INFORMATION ABOUT LATVIA Official name: Republic of Latvia Area: 64 589 km² – land area 62 249 km², internal waters – 2 340 km²

Read more on www.balticexport.com National holidays: • January 1 – New Year’s Day; • March or April – Good Friday, Easter (the date changes every year); • May 1 – Labour Day and the convocation of the Constitutional Assembly in 1920; • May 4 – Restoration of Independence Day; • June 23 – Midsummer’s Eve (Līgo!); • June 24 – Midsummer’s Day (Jāņi!); • November 18 – Independence Day – proclamation of the Republic of Latvia; • December 24-26 – Christmas; • December 31 – New Year’s Eve Education: primary, high school and higher education (primary and high school education state funded). Over 90% of children attend school Religion: largest religious groups in Latvia – Christian, Catholics, Lutherans and Orthodox Mineral deposits: sand, sand and gravel mixture, peat, dolomite Time zone: december through March: GMT + 2 hours (winter time); April through November: GMT + 3 hours (summer time) Electricity: 220V / 50 Hz GSM: 900 /1800 International dialing code: +371 Internet country code: .lv Number of Internet users: 81.2% of Latvia’s residents have Internet access (Data: Central Statistical Bureau of Latvia, 2018) Cost of living: Riga is the 92th most expensive city in the world (Mercer Human Resource Consulting data for 2018)

Population: 1,95 million (68% live in urban areas, 32% – live in rural Emergency phone numbers: areas), population has reduced by 186 000 over the past 7 years since • emergency services .............................................................112 early 2011, 17,7 thousand have emigrated to other countries. 61,7% of • Firefighters .....................................................................01, 110 residents are of working age, while 64,5% are economically active. 62% • Police ......................................................................02, 110, 112 are ethnic Latvians. Second largest ethnic group are Russians, which • Emergency medical assistance .............................03, 112, 113 make up to 25,4% of the population. Over 170 ethnic groups live in Latvia. • Emergency gas service ........................................................114 (Data: Central Statistical Bureau of Latvia, 2017-2018) Capital: Rīga (population – 637 971, or a third of the country’s residents) Distance (by road, from city centre to city centre) from Riga to: • Tallinn ............................................................................. 310 km Largest cities: Daugavpils (83 250 residents), Liepāja (69 180), Jelgava • Vilnius............................................................................. 293 km (56 383), Jūrmala (49 073), Ventspils (34 855) (Data: Central Statistical • Moscow .......................................................................... 935 km Bureau of Latvia, 2018) • Minsk.............................................................................. 480 km • Warsaw .......................................................................... 693 km Administrative division: Latvia has 110 regions un 9 cities • Berlin ............................................................................ 1122 km Basic law: Constitution, introduced in 1922 Flight times from Riga Airport: Political system: Parliamentary republic, prime minister and Cabinet of • Tallinn ...............................................................................55 min Ministers hold highest executive power, while parliament (Saeima) • Vilnius...............................................................................55 min holds legislative power. Saeima is made up of 100 members • Moscow .................................................................... 1 hr 40 min Head of state: President • Minsk........................................................................ 1 hr 15 min • Stockholm ................................................................ 1 hr 20 min Diplomatic missions: Latvia has 47 diplomatic and consular missions • Frankfurt .................................................................. 2 hr 15 min abroad: 37 embassies; 6 permanent representations, 1 consulate • London ..................................................................... 2 hr 50 min general and 2 consulates, and also 1 office of the consular department. • Rome .............................................................................. 3 hours In Latvia, there are 35 foreign embassies, 5 international organizations, 25 honorary consulates and 3 consulates general. Climate: Latvia has a temperate climate, with maritime climate conditions felt throughout the country. As a result – the weather is cloudier with Currency: euro less sunshine, and temperatures are a bit lower than medium latitude Language: official language – Latvian, however Russian is also widely used areas. Latvia has four seasons of near equal length. The average temperature in Latvia in 2018 was +7,6°C. The total rainfall in 2018 National flag: maroon-white-maroon; it is one of the oldest flags in the world, used as early as the 13th century was 472,2 millimeters.

About Lithuania

Read more on www.balticexport.com • On February 16, 1918, Lithuania proclaimed its independence, and was accepted into the League of Nations in 1921. • On March 11, 1990, Lithuania announced the restoration of its independence.

CULTURE AND SPORTS • Every four years, Lithuania holds its Song and Dance Festival (Dainu vente), which gathers thousands of singers and dancers from all over the country. This festival has been included on UNSESCO’S Intangible Cultural Heritage List. • Basketball is by far the most popular sport in Lithuania. Lithuania has produced many well-known basketball stars – Arvydas Sabonis, Šarunas Jasikevičius and many more. In the short history of Lithuanian basketball Lithuania is located on the eastern shore of the Baltic Sea, (the first basketball match was held in 1922) Lithuanian basketball and is the largest country in the Baltics population wise players (men) have won bronze medal in the Olympic Games 3 times, (2,98 million). Lithuania is bordered with Latvia to the north 3 times have been European champions and once – as European vice champions. The women’s basketball team and youth basketball teams (588 km), Belarus to the southeast (660 km), Poland to the can also be proud of the titles of European vice-champions. south (103 km) and the Russian enclave of Kaliningrad to • One of the brightest sports stars in Lithuania in 2012 was a Lithuanian swimmer Ruta Meilutite, who won a shocking victory at the 100-meter the southwest (273 km). Olympic Games in London, winning a gold medal at the age of 15.

LITHUANIA’S ECONOMY • Being a part of the European Union and NATO oﬀers investors guarantees of economic and political stability. • Lithuania has been described as a country with the best road infrastructure in Eastern Europe. • Lithuania has three international airports – Vilnius, Kaunas and Palanga. • The leading sectors of the Lithuanian economy are transport and logistics, food production, furniture manufacturing and woodworking, mechanical engineering, textile production and sewing, laser and biotechnology, banking sector. • In 2019, Lithuania ranked 21st in the world economic freedom rating, meanwhile 12th in the European Union. (Index of Economic Freedom, 2019)

MEMBERSHIP OF INTERNATIONAL ORGANIZATIONS • September 10, 1991..................................................................... OSCE • September 17, 1991 ................................................ the United Nations • October 7, 1991 ....................................................................... UNESCO • May 14, 1993 ...................................................... the Council of Europe • May 31, 2001 ......................................... the World Trade Organization • March 29, 2004 ............................................................................ NATO • May 1, 2004 ........................................................... the European Union • 2007 .......................................................................the Schengen-zone • January 1, 2015 ....................................... a member of the euro-zone • 5 July 2018 ................................................................................... OECD

POLITICAL SYSTEM • Since regaining independence in 1990, Lithuania has gone through rapid development, and witnessed broad social, economic and political change. It has become an independent, democratic and parliamentary republic. • The state authority is carried out by parliament (Seimas), president, government and the court. The government’s authority is restricted by the Constitution. The Lithuania president is elected in direct elections by the people for a five-year term. The president oversees foreign and security policy.

HISTORY • The Kingdom of Lithuania was established in at the beginning of the 13th Century, when King Mindaugas was crowned King of Lithuania. • The date of the formation of Lithuania’s current capital Vilnius is considered to be 1323, when it was mentioned in the official correspondence of Grand Duke Gedimina in 1323. The Old Town of Vilnius is one of the largest and most beautiful sites of Eastern and Central Europe (360 ha) and UNESCO World Heritage.

GENERAL INFORMATION ABOUT LITHUANIA Oﬃcial name: Republic of Lithuania Area: 65,302 km² Population: 2,8 million – ethnic Lithuanians (86,9%), Poles (5,6%), Russians (4,6%), Belarusians (1,2%), Ucranians (0,6%). Capital: Vilnius (population – 542,366). Major cities: Kaunas (306,800), Klaipeda (158,500), Šiauliai (100,575). Administrative division: 10 districts, divided into 60 municipalities (cities and districts), which are subdivided into 546 municipalities. There are four municipalities in Lithuania – Augštaitija, Suvalkija, Žemaitija, Dzukija. Basic Law: Constitution, approved on October 25, 1992 Head of State: President elected by direct election for five years. Currency: euro Major public holidays: • January 1 – New Year; • February 16 – Restoration of the State Day (1918); • March 1 – Day of Restoration of Lithuania’s Independence; • (March-April) – Easter (guided by Western Christian traditions); • May 1 – International Labour Day; • June 24 – Rasa Day and Midsummer celebration; • July 6 – Day of the State (Coronation of Lithuanian King Mindaugas); • November 1 – All Saints’ Day; • December 25 and 26 – Christmas. Language: oﬃcial language – Lithuanian National flag: consists of 3 identical horizontal bands: the upper – yellow, the middle – green, the bottom – red. Flag width and length ratio – 1: 2. Mineral resources: dolomite, limestone, plaster, clay, gravel, sand, peat. Several places deep underground contain mineral waters and thermal waters, which are also used for medical treatment. Time zone: UTC+2 GSM: 900/1800 Internet country code: .lt International dialing code: +370 Number of Internet users: 2,1 million or 81.2% (Data: Central Statistical Bureau of Latvia, 2018) Cost of living: Vilnius is the 148th most expensive city in the world (MHR Consulting data for 2018)

About Estonia

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HISTORY • Estonians are one of the Baltics’ Finnic peoples, who are ethnically related to the Finns and the Sami. Historically and culturally, Estonians have always had a close connection with Scandinavia (especially Sweden and Denmark), as well as Finland. The Estonian language belongs to the Finnic branch of the Uralic language family, and is similar to Finnish. • Estonia became an independent country on February 24, 1918. • Estonia declared the restoration if its independence on November 16, 1988, but was oﬃcially recognized as an independent country on August 20, 1991. • Estonia’s capital Tallinn is one of the best preserved Medieval cities in Europe, and the city’s Old Town has been included on UNESCO’s World Heritage list.

Estonia is a country located in Northern Europe on the northAND SPORTS east corner of the Baltic Sea. With an abundance of islands CULTURE • Famous Estonians are: writer Jaan Kross, whose works have been and lakes, Estonia is the smallest of the three Baltic States, translated into 20 languages, the author of Estonia’s national epic and one of the smallest countries in the European Union. Kalevipoeg Friedrich Reinhold Kreutzwald, as well as writer, film producer Estonia is bordered with Russia to the east and Latvia to the and politician Lennart Meri. south. It shares a sea border with Finland, and is located • Estonia still celebrates its Song and Dance Festival traditions, which were established in the 19th century. The Estonian Song and Dance Festival a short distance from Finland across the Gulf of Finland. has been included on UNESCO’s Intangible Cultural Heritage List. • Estonians have won many Olympic medals over the years. The country’s most successful Olympian is cross-country skier Andrus • Estonia is a country known for its economic and political stability, acVeerpalu, who has won two gold and one silver medal at the Olympics. cessibility, low business costs and investor equality. • Estonia ranks 15th in the Index of Economic Freedom (2019), 16th in the GENERAL INFORMATION ABOUT ESTONIA Ease of Doing Business Report (2019, World Bank) and 32nd in terms of competitiveness (Global Competitiveness Report 2018, World Economic Oﬃcial name: Republic of Estonia (Eesti Vabarik) Area: 45 336 km² Forum). • Business regulations in Estonia are much more liberal than in surrounding Population: 1,32 million. 69% are ethnic Estonians, Russians (26% of the population), Ukrainians (2%), Belarussians (1%) and Finns (1%). countries in the Northern European region. • Estonia has low taxes, and the tax system is straightforward. Capital: Tallinn (population – 426 538, or 30% of the country’s residents). Furthermore, costs are considerably lower than in neighbouring countries Administrative division: Estonia has 15 regions, 14 cities and 65 counties in Scandinavia. • Estonia has one of the highest credit ratings in the region, according to Basic law: Constitution (adopted in 1920, supplemented in 1992) Political system: Parliamentary republic Fitch, Standard & Poor’s and Moody’s. • Foreign investments have played an important role in Estonia’s economic Head of state: President (elected to a five-year term) growth. The favorable business environment in Estonia has allowed Currency: euro both local and foreign companies to develop, such as SKYPE, Playtech, Public holidays: Swedbank, Ericsson, Tallink Group, ABB, Elcoteq etc. • January 1 – New Year; • Estonia is one of the leading countries in the implementation and • February 24 – Independence Day; development of e-government. It has a very advanced Internet • (March-April) – Easter (guided by Western Christian traditions); infrastructure: 90% of the population aged 16 to 74 use the Internet • May 1 – Spring Day (2018, Statistics Estonia), all schools are online, all cities and villages • Pentecost – on Sunday, on the 50th day after Easter (Easter – 1st have public Internet access points. day), the date changes every year • Estonia’s main commercial industries are: engineering, fuel industry, • June 23 – Victory Day (Võidupüha) electric power industry, metal industry, chemical production, pulp and • June 24 – St. John’s Day or Summer Solstice paper industry and woodworking. • August 20 – Independence Day • December 24-26– Christmas MEMBERSHIP IN INTERNATIONAL ORGANIZATIONS • September 17, 1991................................................ the United Nations Language: oﬃcial language – Estonian, however Russian is also widely used • On March 29, 2004 ....................................................................... NATO • On May 4, 2004 ..................................................... the European Union National flag: blue-black-white; blue represents the sky, black represents • On November 9, 2010 .................................................................. OECD the land, while white represents joy and happiness • On January 1, 2011 .................................. a member of the euro-zone Religion: estonians are mostly Lutheran, however, other religions are also present – Orthodox, Baptists, Methodists and Catholics POLITICAL SYSTEM Mineral deposits: Estonia’s natural resources include phosphate of lime, • Estonia is a parliamentary democracy. The president is elected by limestone, oil shale, sand and peat. parliament once every five years. The current president is Kersti Time zone: UTC+2 Kaljulaida. The next presidential election is scheduled for 2021. • The highest legislative power is the parliament (Riigikogu), which is made GSM: 900/1800 up of 101 members, who are elected to four-year terms. Parliament International dialing code: +372 members are elected by proportional representation. The 14th Riigikogu Internet country code: .ee elections will take place in March, 2023. • The Estonian government is made up of the prime minister, who is Number of Internet users: 90% of all Estonian residents (2018) appointed by the president, and 14 Cabinet ministers. The government Cost of living: Tallinn is the 140th most expensive city in the world (Mercer Human Resource Consulting data for 2018) is confirmed by the president and the parliament.

ESTONIA’S ECONOMY

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After a record-breaking year, export is expected to slow down In all of the Baltic countries, export growth continued in 2018, reaching new record highs. At the same time, experts warn that the same growth would be too optimistic this year. The export volumes of the Baltic States will continue to grow, but more moderately than they were seen last year. Without big surprises, backbone of Latvia’s export is still made up of wood and wooden products, as well as machinery, mechanisms and electrical equipment – the export value of both groups exceeded the value of 2.2 billion Euros last year. Only wood can be considered a real Latvian export product, as in terms of machinery it is a traditionally high proportion of re-exports. Last year, the major increase was caused by the removal of aircraft engines for sending them for repair to the United States, which they will return from after some time. Meanwhile, export of wood and wooden materials increased for the ninth year in a row, and in 2018 the value of export of these goods for the first time exceeded two billion Euros. In contrast, over the past decade, exports of wood and wooden Export growth in 2018 was mainly driven by stable growth in products have almost tripled compared to 2009. Last year, the value the main Baltic markets – the European Union (EU) and Russia. of wood and wooden products was boosted both by the increase Export growth was also recorded in all major commodity groups. in raw materials and the increase in physical output. The biggest rise was recorded in Sweden. In turn, this year, the growth of export could be slowed down due to changes in global economy. “It is expected that the export At the same time, the dry summer caused drop in grain export. dynamics will remain moderate this year. Growth rates in EU “On the services side, after a successful performance in the second countries for 2019 are projected to be slower than a year ago. and third quarters, export of transport services declined sharply. Export dynamics will also be constrained by weak demand in CIS This is due to weaker export of road transport services and possibly markets. Third world countries is a significant export develop- also to the completion of repairs in the port of Ust-Luga. Namely, ment direction, but currently their share in the export structure the cargoes that were sent through Latvia (ports, railways) during is still relatively small. Overall, uncertainties in external markets the repair and gave the transport sector a rapid but short growth, do not allow for a noticeable expansion of export opportunities,” may now go through the Russian port again. This trend could stated in the Ministry of Economy’s assessment of foreign trade continue this year as well,” explains Agnese Buceniece, senior economist at Swedbank. development. There are no major changes in the list of Latvia’s largest export markets. We export the most to neighboring countries – Lithuania In 2018, Latvia’s foreign trade turnover at current prices reached and Estonia. They are followed by Russia, Sweden, Germany, Great EUR 27.8 billion, which is EUR 2.25 billion or 8.8% more than in Britain, Denmark and Poland. 2017, according to statistics. Including export value amounted to EUR 12.34 billion (an increase of EUR 833.9 million or 7.2%) GROWTH IS FASTER IN THE NEIGHBOURHOOD and imports to EUR 15.46 billion (an increase of EUR 1.42 billion The other Baltic countries have been able to grow export faster or 10.1%). than Latvia last year – both in percentage and in terms of money.

GROWTH WITHOUT SURPRISES

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The biggest increase was recorded in Estonia, which increased its export by 12% last year, reaching 14.4 billion Euros. The biggest increase in export was made by wood and wooden products. However, the largest volume of export has traditionally been made up of electrical equipment, which accounted for 16% of Estonia’s total export value, followed by mineral products with 15% share and wood, and its products with 11% of export. The main export directions of Estonia last year were Finland, Sweden and Latvia. At the same time, Estonia exported 68% of its goods to the EU Member States.

and services in December, there were minuses compared to the year before. The value of export of goods declined by 1.3%, while export of services dropped by 4.9%. “This year promises to be challenging for export. Lack of labor and high load capacity will increasingly limit growth opportunities. The slowdown in the economies of our trading partners and the growing political and economic uncertainty in the world will curb growth. Although slower but external demand will continue to grow. Surveys show that the growth rate of export orders is no longer rising, but has stabilized at a rather high level. These are signals that export will continue to grow, but growth will be moderate and we can see the minuses again in some months,” says Agnese Buceniece.

Mikhail Nestor, an analyst at SEB Pank in Estonia, emphasized that there is nothing to hope for a large increase in export in the future. On one hand, slower growth is expected in the largest export markets of Estonia, on the other hand, Estonia loses The UK’s withdrawal from the European Union may also bring its the advantage it had previously received at a relatively lower adjustments, as it is the largest market for Latvia’s main export commodity – wood. Although trade with the UK will certainly not price level. stop, a rather tense period is expected until everyone understands Lithuanian export grew by 7.3% last year and reached 28.3 bil- the new trading conditions. lion Euros. Oil products, tobacco products and chemical products “Political risks related to trade conflicts, Brexit and fiscal policies showed the largest increase in export. of individual euro zone countries have not diminished and are The biggest export markets of Lithuania last year were Russia, growing. Meanwhile, newer euro area economies are increasingly Latvia, Poland and Germany. showing signs of slowing economic growth in our largest export market, and precautionary indicators also cause some caution. All SLOWING DOWN IS EXPECTED this suggests, in general, that Latvia’s export growth potential is The last month of 2018 showed one of the weakest export per- limited this year and in terms of Euro it is unlikely to exceed 3-5%,” formances throughout the year. In Latvia, in both export of goods says Mārtiņš Āboliņš, economist at Citadele Bank.

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Brexit postponement gives a moment of breath, the impact on export will still be visible The leaders of the European Union (EU) member states and the British prime minister agree to postpone Brexit until October 31 the latest. It has also provided relief to Baltic exporters. However, the uncertainty about what the British import tariffs will be, continue. The trade between Latvia and the United Kingdom has grown year by year and has reached its highest historical value last year. Britain is also a place where many Latvian citizens have gone to work. Therefore, a successful outcome of Brexit, which would create as few problems as possible for entrepreneurs and people, is also in Latvia’s interest.

Erlands Krongorns, economist at Bank of Latvia, however, points out that the balance of payments data show that most of the payments for export to Great Britain are in euro. This means that most Latvian entrepreneurs have at least hedged against currency risks. However, if Brexit will make it difficult to deliver goods and the UK economy will grow slower, it will have an inevitable impact on demand for Latvian goods.

So far, speaking to businesspeople, all say that Britain’s departure from the EU will have an impact. But everyone is equally unanimous “For the UK, Latvian timber industry is one of the main suppliers, and I think it will continue to be. Some procedures may be that it is not yet possible to say exactly what it will be. intensifying. However, Latvia also successfully competed in the UK market before joining the EU, so Latvian timber industry will WOOD AND TRANSPORT certainly not disappear,” says Kaspars Gerhards, the new Minister The Bank of Latvia estimates for balance of payments data show of Agriculture. that in 2017, 70% of Latvia’s export consisted of goods and 30% of services. Britain was the sixth largest outlet for Latvian goods and UNCERTAINTY ABOUT THE FUTURE the third largest for services. In addition, according to statistics, For the current and next year, the Bank of Latvia has determined Latvia’s export to Great Britain in 2018 amounted to nearly 700 more modest export growth forecasts than in previous years. This million Euros, which is half more than in the pre-crisis years. has been influenced not only by Brexit, but also by the expected The dominant Latvian commodity for export to Great Britain is still wood and its products. It accounts for more than 60% of the total Latvian export of goods to the United Kingdom. The United Kingdom is also a destination for 18% of the total export of Latvian timber and its products, followed by Sweden with 12%, according to data collected by the Ministry of Agriculture. In addition, if in 2017, when the first Brexit referendum took place, there was a slight decrease in timber export, then last year the export volumes were surpassed.

slower growth in other economies and talks of ‘trade wars’. According to forecasts of the Bank of Latvia, Latvian export will grow by 3.1% this year and by 3.4% next year. The central bank has previously assessed the impact of Britain’s withdrawal from the EU on the Latvian economy. Two scenarios were analyzed about no-deal Brexit – the worst case scenario, where in one case the British economy would fall by 3%, and the other by 6%. Both scenarios show that Latvia’s exports to Great Britain will fall substantially. In the first scenario – by 13.5%, in the second – even by 27%. In addition, indirect effects have yet to be reckoned with, as other countries’ exports to the United Kingdom will also fall. Therefore, it would be more difficult for Latvia to export to other markets where competition would be aggravated.

“2018 has been a very successful year, but the same results would not be predicted for 2019. And not because of the Latvian forest industry’s work, but because of the global economic situation. All these things are affected by long-term investments, including construction, which has a major impact on timber consumption,” There is also the uncertainty that would hamper investment. If said Arvids Ozols, Director of the Forest Department of the Ministry entrepreneurs are not clear about the future, they will refrain from of Agriculture. investing and thus hinder economic development. In turn, export of services to Great Britain are dominated by Overall, the cumulative decline of Latvia’s GDP over the three transport – logistics and air transport services. years since the difficulties in the trade negotiations in the case of

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an average unfavorable scenario would be 0.8% and 1.7% in the EU diplomats reported that the proposed Brexit extension is flexible and that the UK can leave the EU earlier as soon as the withdrawal case of an extremely unfavorable scenario. agreement is ratified.

FURTHER TALKS The British Prime Minister, Theresa May, had asked for the UK’s withdrawal from the EU to be postponed until 30 June. The majority of EU leaders at the last summit supported a longer term – even before the end of the year or later – but French President Emmanuel Macron, who insisted that protracted Brexit should not jeopardize the functioning of the EU, objected.

May needs time to get the Brexit agreement approved by the British Parliament, where this agreement has already been rejected three times.

Without Brexit’s postponement, Britain’s 46-year membership in the EU would end on 12 April without an agreement, creating a risk of economic chaos on both sides of the English Channel. The ministers of the government have begun negotiations with the opIn the end, France had to put up with the promise that the post- position Laborers on a compromise to reach a Brexit agreement in ponement of Brexit would also be considered at the EU summit the House of Commons. Labor Party leader Jeremy Corbin wants Britain to commit to staying in the EU customs union. on 21 June.

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Baltic export continue to grow, further development is moderate The Baltic States are proud of this year’s export performance, showing steady growth and being higher on average than elsewhere in the European Union (EU). However, experts warn that soon the growth rates of export will become more moderate. The reasons are found both in the external markets and in the Baltic economies, where the labor force is becoming an increasingly stumbling block for growth. The latest foreign trade data are available for August 2018 and are encouraging for the Baltic States. In the eight months of this year, Estonia, compared to the same period last year, has increased its export by 11%, Latvia and Lithuania by 9%. This is more than the majority of EU Member States have been able to produce. According to Eurostat data, the largest export volumes in Lithuania during the eight months were EUR 18.4 billion, Estonia exported EUR 9.4 billion, and Latvia – EUR 8.6 billion.

conflict between the US and China, slower economic growth in Latvia’s major trading partner countries, and more local phenomena. For example, due to the drought in spring and summer, we will see a much smaller amount of grain export this year.

DOMESTIC GOODS ARE DOING WELL

Economists from neighboring countries express similar forecasts.

It should always be remembered that the Baltic States are small economies, and here a significant amount of total export flow can be made by the export of goods exported from elsewhere. If re-export flows are deducted, the Baltic countries’ own export performance is even better.

“In the future, we will see a modest decline in external demand. Also, the sharp rise in global commodity prices will decrease,” said Tonu Palm, chief economist at Luminor, evaluating the future outlook for Estonian export, to BNS.

Latvia’s export has traditionally been dominated by wood and wooden products. Of which, wood accounted for almost twothirds of export growth in August, when its export grew by 30.9% compared to August of the previous year. However, there is still a question that higher value added would be desirable for Latvian woodworking products, mainly due to the increase in wood exports to charcoal and firewood, which were shipped to the UK, Sweden and Estonia.

“In the coming months, the growth in export value is expected to continue to gradually decline without a sharp decline in the pace. A more rapid rise in producer prices for exported products is unlikely to compensate for the fall in growth rates,” says Buceniece.

LOCAL BOMB WITH BURNER

On the other hand, the problem of attracting a skilled workforce – including in export companies – is increasingly becoming a major local factor that will affect export in the future. Many manufacturers and service providers are currently faced with the inability to find the workers they need and grow their business accordingly. On the other hand, high competition for labor force wages increase and this raises the question of how these rising costs will be reflected in product prices and whether the Baltic companies will In Lithuania, if total export increased by 9% in eight months, be competitive in external markets. domestic exports grew by 12%, mainly driven by oil products. This year, SEB Bank’s survey of financial directors of companies in In Estonia, the growth of export was also supported by local prod- the Baltic States specifically mentions labor as the main problem. ucts – mineral products, as well as wood and wooden products. “The results of the survey in Estonia show that the issue of labor already increases the pressure on companies’ profitability and IN THE FUTURE, GROWTH WILL BE product prices. In Lithuania, this pressure is already quite high. MUCH MORE MODERATE However, as fast as this year, export is unlikely to be seen in the It is not so pronounced in Latvia. This confirms that Latvia’s development is lagging behind from Estonia and Lithuania once future, experts predict. again. We will definitely get to the same point, that companies will Agnese Buceniece, senior economist at Swedbank, points out that have to think about who will bear the rising labor costs. Whether this is already evidenced by the August data as export growth was they are business owners who will profit, or consumers who will the lowest in the last five months this month. The reasons are accept higher prices. It will become more and more relevant in related to the growing tension in global markets due to the trade the coming years,” says Ints Krasts, Board Member of SEB Bank.

Source: Investment and Development Agency of Latvia (LIAA), Latvian Business Guide

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LATVIAN ECONOMY OVERVIEW Latvia’s economy has experienced one of the highest GDP growth rates in Europe. From 2005 to 2007, the average annual GDP growth rate exceeded 10%, when major inflows of foreign capital stimulated a significant increase in private consumption. In 2008, the country entered a severe recession, as a result of an unsustainable current account deficit, collapse of the real estate market, and large private debt exposure. During the crisis, GDP fell by a quarter, external debt almost doubled, the number of employed persons decreased by 16%, while the real wages of those still employed fell by 12%. Latvia successfully emerged from recession at the end of 2010 and growth has resumed, based mainly on the increasing role of exports. From 2011 to 2013, GDP grew by 4.4% per year on average. In 2016, GDP grew by 2.1%, in 2017 – by 4.6%, while in 2018 – by 4.8%. The growth of the Latvian economy was considerably faster in 2017 and 2018 than in the previous years. It was fostered by the improvement of the situation in the external environment, private and public investments, increase in employment and wages. It must be noted that current export volumes exceed pre-crisis levels by more than 25%.

GDP annual change:

GDP AND EXPORTS AT 2010 PRICES, 2010=100 25

EUR billion

0 2000

2001

2002

2003

2004

2005

2006

2007

GDP

2008

2009

2010

2011

2012

2013

2014

2015

2016

Exports of goods and services

2017

2018

Source: Eurostat

In the long-run, Latvia’s GDP per capita has been catching up with the EU average level. In 1995, it was only at one-third of the EU average, but by 2016 had increased to two-thirds.

GDP PER CAPITA IN PPS, INDEX EU28 = 100 120

116.2

115.5

115.0

113.9

113.8

113.2

113.0

111.9

111.1

57.1

59.0

50.4

52.6

2005

2006

2007

2008

110.6

110.2

52.2

52.5

2009

2010

109.5

109.4

109.0

108.7

108.6

108.2

107.7

60.5

62.3

63.2

63.9

64.2

66.7

56.9

2011

2012

2013

2014

2015

2016

2017

100 80 60 40

40.4

45.8

37.9

43.5

35.4

2000

2001

2002

2003

2004

20 0

EU(15)

EU(28)

Latvia

Source: Eurostat

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After some moderation in 2014-2016 because of external factors, Latvia’s economy is set to grow by around 3% per annum over the next years. According to European Commission forecasts, Latvian economic growth will be faster than the EU average.

GDP CHANGE, % FORECAST BY EC 2019 2020

Malta

5,2

4,6

Ireland

4,1

3,7

Slovakia

4,1

3,5

Romania

3,6

Bulgaria

3,6 3,6

Poland

3,5

3,2

Hungary

3,4

2,6

Cyprus

3,3

2,7

Slovenia

2,8

Latvia

2,7

Estonia

2,4

Lithuania

2,4

3,1 3,1

2,6

Czech Rep.

3,8

2,9

2,7 2,7 2,7 2,6

Croatia

2,5 2,6

Luxembourg 2,2

Greece Spain

1,9

Finland

1,7

Netherlands

1,7 1,7

Portugal

1,7 1,7

2,3

2,1

1,9

1,6 1,6

Austria Denmark

1,6

1,3

1,5

EU Sweden

1,3

Euro area

1,3

France

1,3

Belgium

1,2

1,7 1,7 1,6

1,5

1,3 1,3 1,3

UK 1,1

Germany 0,2

Italy 0.0

1,7

0,8

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Source: Winter 2019 Economic Forecast, European Commission

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The structure of Latvia’s economy has also changed over the years. The proportions of agriculture, manufacturing and transportation have decreased, while the shares of trade, tourism, IT and other services have increased.

GROSS VALUE ADDED IN LATVIA BY ACTIVITY TYPE AT CURRENT PRICES A

14.3%

16.5%

15.7%

14.7%

14.1%

15.3%

13.0%

13.5%

12.0%

6.5%

9.5%

10.3%

12.5%

12.0%

11.9%

12.3%

10.5%

9.0%

9.5%

8.5%

8.9%

10.1%

10.4%

10.7%

8.5%

7.3%

7.5%

7.4%

7.5%

G H I J K

7.0%

6.7%

5.0%

6.5%

7.1%

5.6%

4.6%

5.5%

3.3%

4.4%

3.4%

4.7%

3.7%

5.1%

4.3%

4.4%

4.1%

3.8%

4.2%

3.2%

4.8%

3.8%

4.0%

9.7%

9.3%

9.8%

10.3%

10.1%

2000

2005

2010

2015

2018

(A) – Wholesale and retail trade; repair of motor vehicles and motorcycles, (B) – Manufacturing, (C) – Real estate activities, (D) – Transportation and storage, (E) – Professional, scientific and technical activities; Administrative and support services; Other services; Households; Leisure activities, (F) – Public administration and defence; compulsory social security, (G) – Construction, (H) – Information and communication, (I) – Financial and insurance activities, (J) – Agriculture, Forestry and Fishing, (K) – Mining and quarrying; Electricity, gas, steam and air conditioning supply; Water supply, sewerage, waste management and remediation activities, (L) – Other services.

Source: Central Statistical Bureau of Latvia

The current account deficit in 2018 was 1.0% of GDP. It should be noted that the current account deficit has been significantly improved since 2009, which demonstrates the stable external balance of the Latvian economy.

CURRENT ACCOUNT, % OF GDP 2

38 25

13 C

2 1

7.8

2.0

-3.2

C -3.6

C -2.7

S C -1.7

-13

2 S

S S

C 1.6

C 0.7

C -0.5

C -1.0 G

G G

G 1 1

-25

-38

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: Bank of Latvia

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Latvia’s fiscal policy is focused on ensuring sustainable economic growth and implementing responsible fiscal policy in line with the conditions of fiscal discipline. Since the economic crisis, significant improvements have been achieved in Latvia’s fiscal position. In 2018, the general government budget deficit was € 295.4 million or 1.0% of GDP. The Saeima (parliament) approved the Law on the State Budget for 2018 with a budget deficit of 1% of GDP, this being in line with the permissible budget-deficit amount arising from the specific structural-balance target.

GOVERNMENT DEFICIT, % OF GDP 0

-0.9

-1.5

-0.5

-2 -2.3

-1.6

-2.6

-2.8

-3.2

-4

0.1

-0.5

-0.4

-1.2

-0.9

-1.5

-3.3

-2.9

-2.3

2013

2014

2015

-2.5

-0.6

-1.4

-1.2

-1.7

-1.0

-0.6 -1.0

2017

2018

-4.3 -4.2

-4.3

-4.6

-6 -6.4

-6.6

-8 -10

2002

2003

2004

2005

2006

2007

2008

-8.7

-9.1 2009

2010

2011

2012

2016

Latvia

Source: Eurostat

Latvia’s overall government debt increased during the crisis between 2008 and 2010. After successful completion of its international loan programme, Latvia has repeatedly proved its ability to attract finance on international financial markets under favourable conditions, through organising the issuance of public debt securities. Overall government debt is still one of the lowest in the EU, being € 10.608 billion or 35.9% of GDP in 2018.

GOVERNMENT CONSOLIDATED GROSS DEBT, % OF GDP 100 80 60

73.3 60.4

58.8

61.5

60.9

60.1

79.0

81.6

84.0

85.8

86.6

43.1

41.6

39.4

40.9

84.6

83.4

81.7

40.3

40.0

80.0

60.7

57.5

47.3 36.3

36.8

35.9

18.2

20 0

13.0

13.7

2002

2003

14.0

11.4

9.6

8.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Latvia

2017

2018

Source: Eurostat

This prudent fiscal discipline has resulted in Latvia improving its sovereign credit ratings. International credit rating agencies have rated Latvia’s institutional strengths positively.

LATVIA’S LONGTERM FOREIGN CURRENCY ISSUER RATINGS Moody’s

Moody’s

S&P / Fitch

Fitch

A+

A-

Baas1

BBB+

Baa2

BBB

Baa3

BBB-

Ba1

BB+

Ba2

Ba3

‘00

‘01

‘02

‘03

‘04

Minimum investment grade

S&P

‘05

‘06

‘07

‘08

‘09

‘10

‘11

‘12

‘13

‘14

‘15

‘16

‘17

‘18

‘19

BB-

Sources: Treasury of the Republic of Latvia

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Latvia is an open economy with close links to trading partners in the region. Latvia’s main trading partners are EU countries with 73% of total turnover by value of goods. Broken down by country, the most significant export markets are Lithuania, Estonia, Russia, Sweden and Germany. The main importers to Latvia are Lithuania, Germany, Poland, Russia and Estonia. In recent years, Latvia’s exports have been affected by Russia’s economic downturn and EU-Russia reciprocal sanctions. As a result, in the period from 2013 to 2016, Latvian exports to Russia have decreased by 32%, however, now it is 9.1% from total exports from Latvia. At the same time, Latvia has increased export volumes to other world markets during this period. Exports of goods have increased to EU countries, strategically the most important trading partners. Similarly, Latvian exporters have actively diversified their operations into more remote regions of the world such as India, Japan and Egypt, amongst others. Also import to Latvia comes from EU countries such as Lithuania, Germany, Poland, followed by Russia.

EXPORT OF GOODS FROM LATVIA, BY COUNTRY EUR BILLION 1.6

4.1

6.7

10.4

12.4

TOTAL Lithuania Estonia Russia Sweden Germany UK Denmark Other

2000

2005

2010

2015

2018 Source: Central Statistical Bureau of Latvia

IMPORT OF GOODS TO LATVIA, BY COUNTRY EUR BILLION 2.8

6.9

8.4

12.5

15.5

TOTAL Lithuania Germany Poland Russia Estonia Canada Finland Other

2000

2005

2010

2015

2018 Source: Central Statistical Bureau of Latvia

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Most of Latvia’s exported goods are agricultural and food products (mainly cereal products), as well as machinery and equipment, wood and its articles, metals and their articles. Latvia’s main imported goods are machinery and equipment, food products, vehicles, chemicals and fuels.

EXPORT OF GOODS FROM LATVIA BY GROUPS OF COMMODITIES EUR BILLION 1.6

4.1

6.7

10.4

12.4

TOTAL

Agriculture and food products Machinery, mechanical appliances, electrical equipment Wood and articles of wood Base metals, articles of base metal Products of the chemical or allied industries Vehicles, aircraft, vessels; other transport equipment Mineral fuels, mineral oils and products Other commodities 2000

2005

2010

2015

2018 Source: Central Statistical Bureau of Latvia

IMPORT OF GOODS TO LATVIA BY GROUPS OF COMMODITIES EUR BILLION 2.8

6.9

8.5

12.5

15.5

TOTAL Machinery, mechanical appliances, electrical equipment Agriculture and food products Vehicles, aircraft, vessels; other transport equipment Products of the chemical or allied industries Mineral fuels, mineral oils and products Base metals, articles of base metal Other commodities

2000

2005

2010

2015

2018 Source: Central Statistical Bureau of Latvia

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The most important exported services from Latvia are transport (by road, sea and railway). Export revenue from construction, transport (especially post services), computer and IT services is also increasing. Latvia mainly imports transport services (by air, road and sea) and travel services.

EXPORT OF SERVICES FROM LATVIA EUR MILLION 1107 1990

3050

4355

5292

TOTAL

Transport

Travel

ICT Services Financial and insurance services Construction

Other 2000

2005

2010

2015

2018

2279

2899

Source: Bank of Latvia

IMPORT OF SERVICES TO LATVIA EUR MILLION 625 1293

1749

TOTAL

Transport

Travel

ICT Services Financial and insurance services Construction

Other 2000

2005

2010

2015

2018

Source: Bank of Latvia

Agriculture, forestry and fishing

Manufacturing

Manufacture of food beverages and tobacco products

Manufacture of textiles and leather products, clothing

Manufacturing

Manufacture of textiles and leather products, clothing

Manufacturing

Manufacture of textiles and leather products, clothing

Manufacture of wood products, paper and their equipment

Manufacturing

Manufacture of wood products, paper and their equipment

Manufacturing

Manufacture of wood products, paper and their equipment

Manufacturing

Manufacture of wood products, paper and their equipment

Manufacturing

Manufacture of wood products, paper and their equipment

Manufacture of chemical products, rubber and plastic products

Manufacturing

Manufacture of chemical products, rubber and plastic products

Manufacture of basic metals, metal products and equipment

Manufacturing

Manufacture of basic metals, metal products and equipment

Manufacturing

Manufacture of basic metals, metal products and equipment

Manufacturing

Manufacture of electronic and optical products, machinery n.e.c.

Manufacture of electronic and optical products, machinery n.e.c. Other manufacturing

Utilities, waste management

Building and civil engineering

Sale and distribution

Transport, warehousing and support activities for transportation

Art, entertainment, hospitality and catering

Finance and insurance

Health care, pharmaceuticals, social services