The Bank of Latvia has reduced GDP growth forecasts to this year to 1.2% / day

The Bank of Latvia also reduced GDP growth forecasts from 3% to 2.8% in 2026, but the forecast for economic growth in 2027 was reduced from 3.3% to 3.2% in December last year.

The Bank of Latvia noted that the vision of GDP growth in 2025 was more pessimistic than in previously published forecasts.

At the same time, the Central Bank acknowledged that progress in the implementation of major investment projects, increasing defense spending, as well as the reduction in uncertainty in trade policy will contribute to economic activity in the coming years.

The Bank of Latvia expects unemployment to remain close to 7%in the coming years, but the average wage growth is expected to be moderate.

« Events in the external environment and the slowdown in economic growth hinder faster improvements in the labor market, but in the medium term, demand for labor will be topical, including for various large -scale projects, » says the Bank of Latvia.

The Bank of Latvia forecasts 6.9% of the economically active population this year, 6.7% next year, and 6.5% of the economically active population in 2027.

The Bank of Latvia also mentions that the salary growth is hindered by the restrictions on the public sector’s salary fund. However, due to negative demographic changes, as the workforce offer reduced, wage increases will remain lasting in the medium term – about 6%.

Nominal gross wage growth this year is expected to be 6%, but next year and in 2027 – by 6.3%.