Kurzeme could outpace other Latvian regions in the pace of its development – this has long been suggested, for instance, by the sector structure, the size of the towns, and the effectiveness and focus of the development policies pursued by local authorities. So far this has not happened, and it did not happen last year either, but work on an economic breakthrough continues, and its results could become more visible this year, notes Luminor bank economist Pēteris Strautiņš.

Liepāja's breakthrough could change Kurzeme's economic trajectory

The millstone around the region's economic neck for more than 10 years now has been the decline in transit volumes. Data from Latvijas Banka show that exports of port and rail services peaked in 2012, but have since fallen by more than fourfold. This affects Kurzeme, with its two large ports, more than it affects the country as a whole. The role of this income in Latvia's economy has been shrinking since the start of the century: in 2000 it equalled 8% of GDP, but today it stands at only around 0.5%.

Alongside the seemingly endless decline in transit, Kurzeme's economy had other challenges to overcome last year too. Tukums continued to feel the effects of the closure of the Skonto Plan factory. Last year, the metal-related industries saw a turnaround after a two-year slump, though at the start of 2025 the situation could still be described as a crisis. The focus on these industries in Liepāja's and Ventspils's industrial development is a strategically sound choice, but, owing to prevailing conditions, it had not yet delivered the expected results at that particular moment.

This year's story is expected to be very different. Liepāja's industrial figures for the start of the year are excellent, investors are applying for space in the new industrial parks, and access to credit for company development projects will also be important for further growth. The city is the second-strongest municipality in the country when measured by income generated per capita from metal-related industries. Faster growth in Liepāja this year will significantly improve Kurzeme's overall performance, since the city accounts for roughly a third of the region's economy.

Working against this will still be the effect of transit, and household budgets in the region could be further affected by companies' staffing decisions in response to what has already happened, as they come to accept that cargo flows will not recover any time soon. Fiscal policymakers' wish to cut the subsidies needed to maintain the railway could also affect Kurzeme, just as it could Latgale.

Regional growth needs both speed and mass

Last year, Kuldīga municipality achieved the fastest growth in export-driven economic activity in Kurzeme. It has also been the fastest-growing municipality in the region since 2014, when it still had Kurzeme's weakest economy. Kuldīga is an example of how it is possible to grow rapidly by deepening expertise in traditional industries – in this case, woodworking. The development of plywood production has given the town's growth a strong push, both increasing the number of well-paid jobs and reshaping the business environment as a whole, encouraging other companies to become more ambitious too.

The fact that Liepāja and Kuldīga are both developing so successfully, and in such different ways, at the same time shows that regions and municipalities can pursue very different development strategies. There is one general recommendation that applies to all towns and municipalities except Riga and its immediate surroundings: rapidly increasing export income will be difficult without success in producing goods – whether in manufacturing or in natural-resource industries. Tourism can be a good complement, and it is also possible to develop exports of intellectual services outside the capital. However, for any industry to drive a real rise in prosperity in a particular place strongly enough, it needs both speed and mass.

From fish processing to engineering

Alongside the “metal” industries, food processing is also worth noting – a sector whose role in Kurzeme is smaller than in other regions outside the capital. At the same time, fish processing is a particularly strong sub-sector. Historically this has meant canning in various coastal towns and villages – Roja, Kolka, Mērsrags, Ventspils and elsewhere. After a long period of adapting to the geopolitical situation, this sector is now picking up momentum. Its impact is reinforced by Liepāja's Syfud, which is gradually becoming the largest company in this sector in Latvia.

In the forest sector – that is, forestry and woodworking – Kurzeme has to date been characterised by an orientation towards mass-produced goods: it has strong forestry and sawmilling, but less further processing. However, a shift towards more specialised production is now visible in Kurzeme too, thanks largely to a single company, Stiga RM, which restarted plywood production in Kuldīga and this year opened a new board factory in Tukums municipality, with another planned alongside it.

But Kurzeme's industry pins its greatest hopes on the engineering sector – metal production and processing, machine-building and electronics. Alongside the success stories in Liepāja and Ventspils, Saldus municipality is also worth noting. Measured per capita, the export income generated by this municipality's companies ranks it eighth among Latvia's 42 municipalities. It combines both highly productive agriculture and diversified industry. While food processing and building-materials production have been carried out in Saldus for a very long time, since accession to the European Union the town's economy has also been boosted by a group of companies that originally developed as an offshoot of Norway's shipbuilding and natural-resource-extraction technology cluster, producing various components in both metal and plastic and gradually moving towards manufacturing ever more complex products.