Despite the difficult geopolitical situation and continuing uncertainty, Latvia's economy has this year managed to overcome successfully the upheavals of recent years, achieving gross domestic product growth of 2.5% in the third quarter compared with the same period last year.
In the third quarter, GDP at comparable prices was 2.5% higher than a year earlier. At the same time, over the first three quarters of this year GDP grew by 1.7% compared with the corresponding period of the previous year, according to Central Statistical Bureau data.
"The growth in gross domestic product in the third quarter allows us to forecast a more positive overall figure for the year, driven by the same forces as before – manufacturing, construction and trade. Overall, the economy has grown faster than the pessimists were predicting as recently as this summer.Latvia's position is being improved both by the increasing inflow of European Union funds and by more favourable trends in external markets, as well as by the economic stimulus measures implemented by the government, particularly in the areas of lending and investment. The introduction of the bank solidarity tax has encouraged credit institutions to become more actively involved in financing the needs of the economy," emphasises Minister for Economics Viktors Valainis.
As inflation stabilised and households' real incomes rose, household consumption in the third quarter was 1.8% higher than a year earlier, a comparatively stronger increase than in the first quarters of the year.
Investment rose substantially, helped by faster absorption of EU funds and by growth in private sector lending. For example, at the end of September 2025, compared with the corresponding period of the previous year, lending volumes to non-financial corporations grew by 16.1% and to households by 9.6%. Investment in gross fixed capital formation in the third quarter increased by 10.8% compared with the corresponding period of the previous year, largely reflecting growth in investment in structures and buildings – up 10.9% – and in machinery and equipment, including vehicles – up 15.2%. Investment in intellectual property products also showed positive momentum (+1.5%).
Exports of goods and services in the third quarter were 3.0% higher than a year earlier. Exports of goods grew by 2.8%, while exports of services rose by 3.2%. This points to moderate but steady growth, underpinned by external demand and by businesses' ability to diversify their markets. The rise in goods exports was driven mainly by wood and wood products (excluding furniture), electrical appliances and electrical equipment, and mineral products. The rise in services exports was driven by growth in transport and other business services.
Import volumes grew by 5.8% in the third quarter of this year, with imports of goods up 4.9% and imports of services up 8.8%. The main imported goods were mineral products, electrical appliances and electrical equipment, and land vehicles and parts thereof, while the growth in services imports was driven mainly by transport services and other business services.
The largest contributions to Latvia's GDP growth in the third quarter of 2025 came from manufacturing, construction and trade. Manufacturing grew by 7.3%. Momentum was particularly strong in food production and in the production of wood and wood products. Only 6 of the 22 manufacturing sectors saw negative momentum. The construction sector also grew sharply – by 9%, largely as a result of substantial investment in infrastructure projects (roads, bridges, electricity supply). Value added in the trade sector rose by 3.1%, including retail trade, up 1.3%.
Accommodation and food services also made a large contribution to GDP growth, exceeding the previous year's level by 4.9% in the third quarter of this year. Other sectors of the Latvian economy likewise showed positive momentum. The remaining industrial sectors grew by 1.1%, driven mainly by increases in electricity and gas supply, heat supply and air conditioning (up 7.3%).
Growth was weaker in the information and communication technology sector (+2.6%), real estate activities (+3%), business services (+2.6%) and public administration and education (up 1.2% and 0.3% respectively).
Value added declined in agriculture (-2%), in mining and quarrying (-24.2%), largely because of unfavourable weather conditions, and in health and social care (-2.4%).
Sentiment indicators point to expectations of growth, further supported by the gradual recovery of household purchasing power.
The Ministry of Economics forecasts that GDP growth this year could be even higher than the 1.6% previously projected, and that next year, despite unfavourable geopolitical conditions, the economy will grow by at least 2.2%.