Latvian Economy

Historical Overview

Economy of Latvia has faced numerous changes in the previous decades. I remember the times when Latvia, together with Lithuania and Estonia were called "The Baltic Tigers". After joining the EU in 2004, we had a period of stellar economic growth and for three years, Latvia averaged double digit economic growth!

Well, truth to be told, our success didn't last for long. As some of you might know, in 2008 Latvia experienced one of the world’s worst economic crisis that was generated with an easy credit market burst, resulting in an unemployment crisis, along with the bankruptcy of many companies. 

When the global liquidity crisis hit, Latvia was one of the first casualties as unemployment, inflation and debt  increased significantly while GDP fell 25 percent between 2008 and 2010, and one of the country’s largest banks, Parex Bank, collapsed and was taken over by the state. The economy of Latvia showed its first signs of stabilisation in 2010 and is in its recovery stage since, averaging a steady GDP growth of 5%.

Yes, we've faced tough times indeed and the damage done to the public sector was deadly. However, I do believe, that the economy of Latvia will rise again and will regain its nickname as the Baltic Tiger once again! Truth to be told, at this point we are one of the fastest growing economies in the EU once again, but we must take into consideration the fact, that we have had a very low starting point due to the 2008 crisis mentioned before, so the total growth is actually not as impressive, as the media and the government love to state.

In 2014 Latvia was one of the few countries, that could fulfill all of the Maastricht criteria and due to that successfully joined the Euro-zone on January 1st, 2014.

---

For informative graphs, visit Tradingeconomics' page about Latvia's Indicators

For information about Latvia's financial crisis visit Thenation's article Latvia's Tiger Loses Its Bite

For more information abut Latvia's recovery visit Diplomaticourier's article Latvia’s Economic Recovery: Lessons to Learn?

---

Monthly Salaries

Our salaries can vary from as low as 320 euro/month but can reach even several thousand, depending on the  employees qualifications, the work hours and the field of work. Of course, there are jobs that offer higher payments, but you either have to be exceptionally talented, or just have to know some influential person who could set you up for one. The thing is, that in Latvia there is a very big gap between the poor and the wealthy. And having a higher education doesn't necessarily mean, that, even if you will get the job, you will get paid adequately. As an example I can mention my mother, who has got her higher education, and works as an elementary school teacher, but receives only around 350 euro/month. Without the help of my father, who runs his own business, she would not even be able to pay all her living expenses, never mention to afford something luxurious as a vacation over broad or a new coat.

I have been living on my own for the past two years not to burden my family, and in my last part-time job as a debt collection specialist I was earning about 2 euros per hour. The job itself was not peasant at all, and, needless to say, I did not consider my wage to be appropriate, as in other European countries you can easily score entry-level jobs yielding as much as 5-10 euros per hour, and the number probably could be even higher. This gap in the salaries is probably number one reason why so many Latvians have chosen to leave their country in hope of better life abroad. I can't even blame them for that.

About the average salaries - the average gross salary is estimated to be around 775 euro, which is about 500 euro after the tax payments. Then again, the 500 euro net salary is the average of the country, and the gap between the rich and the poor is closing ever so slowly. Many families have to live in poverty, especially in the winter, when lots of them cannot even cover their living expenses because of the high heating bills.

For the prices in Latvia, visit Numbeo's Cost of Living in Latvia

Anyhow, since Latvia's economy is one of the fastest growing economies in Europe, I have faith that our economy will continue to expand, the gap between the rich and the poor will decrease and we will feel the changes in our pockets soon enough!

This video actually seemed pretty inspirational, so take a look!

Best, Rihards Zeila