Over the past three years Latvia has achieved the highest number of jobs linked to foreign direct investment in the Baltics, with a total of 28 new foreign investment projects launched in Latvia last year. At the same time, investors' view of the region's future remains positive – 69% of investors forecast that the Baltics' investment appeal will grow over the next three years, according to EY's annual European Attractiveness Survey 2026, which measures new foreign investment activity in Europe and examines investor attitudes.
New foreign investment projects created 1015 new jobs in Latvia in 2025. Among the Baltic states, Lithuania took the lead last year in the number of new investment projects with 30 new foreign investment projects, while in Estonia the number of projects fell to 7. Alongside this, 887 new jobs were created in Lithuania, while Estonia saw 306.
“Europe as a whole attracted more than 5000 foreign investment projects last year. At the same time, there are signs that Europe's innovation capacity is strengthening – foreign direct investment in fast-growing sectors, including artificial intelligence, defence and low-carbon energy, is increasing, although overall short-term investor sentiment remains cautious. Growth has been particularly rapid in the number of artificial intelligence foreign investment projects, which rose by 96% in Europe last year,” says Guntars Krols, EY partner in the Baltic states.
Ieva Jāgere, Director of LIAA: “The results of the EY European Attractiveness Survey 2026 confirm that Latvia is establishing its place on Europe's investment map ever more convincingly. Latvia currently ranks 7th in Europe for the number of foreign investment projects per capita and 8th for the number of jobs created, which is a strong signal to international investors about the competitiveness of our economy, our business environment and our ability to develop high value-added sectors.”
Investors rate Latvia as attractive, but expect greater predictability
In Latvia, tax competitiveness is the factor investors most often take into account – 34% of investors attach the greatest importance to it. Energy costs are cited as a significant factor by 26%, while 24% of investors point to political stability and macroeconomic conditions. Although investment intentions have weakened compared with recent highs – 59% in 2025 and 72% in 2024 – 54% of company executives still plan to launch or expand operations in Europe over the coming year.
Geopolitics creates risks, but also new growth opportunities
In Latvia, 42% of investors identify this as a significant risk. Similar results can be seen in neighbouring countries too – 48% in Lithuania and 46% in Estonia.
“Geopolitical instability and macroeconomic uncertainty around the world continue to sustain cautious investor sentiment, and this is clearly reflected in Europe as well. Geopolitical tensions and conflicts are currently named as the main risk to Europe's attractiveness over the next three years by 41% of respondents – a significant increase compared with 35% in 2025 and 27% in 2024,” Guntars Krols emphasises.
The second most significant risk in Latvia is rising business costs – cited by 28% of investors. Meanwhile, 26% of investors highlight a substantial shortage of skills as a risk. In Lithuania and Estonia, after geopolitical tension, the most significant risks are macroeconomic conditions, including slow growth, high interest rates and a high level of public debt.
At the same time, the geopolitical situation is also creating new opportunities. Proximity to Russia and Belarus increases risk and can delay decision-making, but it also prompts governments to increase spending on defence, energy independence and infrastructure resilience. The number of defence-related foreign direct investment projects in Europe rose by 84%, creating almost 7000 new jobs. The strongest activity in this field was in the United Kingdom, France and Ukraine.
In Latvia, 42% of investors say that the current conflicts have increased their plans to invest in Latvia, while 32% say they have reduced their investment plans. In neighbouring countries this effect has been even more pronounced – 56% of investors in Lithuania report an increase in investment plans, and 50% in Estonia.
“Investors' assessment confirms that Latvia is valued for its competitive tax environment, quality infrastructure and strategically advantageous position in the Baltic region. At the same time, it also clearly outlines the next priorities — the availability of talent, energy competitiveness, digital development and a stable, predictable business environment. It is precisely these factors that will determine Latvia's ability to attract ever larger and more complex investment projects in the future. Today, competition for investment takes place not only between countries, but between regions and innovation ecosystems. Latvia has every opportunity to establish itself as a hub for the Northern European region in the development of high technology, digital solutions, energy and defence industries,” Ieva Jāgere emphasises.
Investment activity is shrinking in Europe
The study shows that in 2025 the investment environment in Europe became more cautious and more selective. In total, 5026 new foreign investment projects were recorded across 47 European countries, which is 7% fewer than in 2024.
Despite the overall decline, Europe's three largest economies still dominate in attracting foreign investment – France, the United Kingdom and Germany together attracted 42% of all projects on the continent. Although France has been in decline since 2022, it is still the leading investment destination in Europe. At the same time, several Eastern and South-Eastern European markets showed improvements: the number of new foreign investment projects rose by 20% in Turkey, by 16% in Romania, by 10% in Poland and by 15% in Lithuania.
About the study
The “EY European Attractiveness Survey” is a comprehensive annual study that compiles foreign investment statistics from across Europe, drawing on the “EY European Investment Monitor” (EIM) database. The statistical section of the study is complemented by investor surveys, which EY carries out in cooperation with “FT Longitude”. Interviews with 500 international investors and 150 investors in the Baltics were conducted between March and April this year.
Note: The EY European Attractiveness Survey is based on the EY European Investment Monitor (EIM) database and its methodology for recording foreign investment projects in Europe. The methodologies and project selection criteria used in different investment studies and statistics may differ, and therefore the data are not directly comparable.
EY is a member firm of Ernst & Young Global and the leading professional services provider in the Baltics. More than 800 EY specialists working in the Baltic states provide audit, tax, outsourced accounting, strategy, transaction and other business and public sector advisory services.