Latvia’s Ministry of Finance updated its 2026-2030 macroeconomic forecasts for preparation of the 2027 state budget, raising projected 2026 gross domestic product growth by 0.4 percentage points to 2.4%. The revision reflects stronger than expected, broad based growth in the first half, when GDP increased 2.8% from a year earlier. Growth forecasts were trimmed to 1.9% for 2027 and 2.0%-2.4% over the following three years as geopolitical shocks, higher energy prices and financial market volatility are expected to slow activity. The ministry lowered its 2026 inflation forecast by 0.2 percentage points to 3.4%, citing stabilizing food prices and a smaller than expected increase in fuel costs. Delayed energy cost effects prompted it to raise inflation projections to 3.7% for 2027 and 2.9% for 2028, before inflation declines to 2.2% by 2030. Unemployment is forecast at 6.8% in 2026 and 6.5% in 2027, easing to 6.1% by 2030, while projected average wage growth for 2026 was reduced to 5%. Risks remain tilted to the downside and include conflict affecting the Strait of Hormuz, escalation of Russia’s war in Ukraine, uncertainty over U.S. trade policy, volatile global markets, higher domestic inflation and delays in investment or European Union fund deployment. The Fiscal Discipline Council approved the forecasts on Sept. 10, 2026.

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