Latvia’s central bank and the country’s Finance Ministry have both lowered their GDP growth forecasts and raised their inflation forecasts. Latvia’s GDP growth will drop to 2.0% in 2026, before rising to 2.4% in 2027 and 3.0% in 2028, according to the Bank of Latvia’s latest macroeconomic projection. In December 2025, the central bank had projected GDP growth of 2.8% in 2026, 2.9% in 2027, and 3.2% in 2028. Annual inflation will amount to 3.6% (3.2%) in 2026, to 3.8% (2.9%) in 2027, and to (3.6%) 3.4% in 2028. Unemployment will drop to 6.7% (6.6%) in 2026, to 6.5% (6.4%) in 2027, and to 6.3% (6.2%) in 2028. Nominal gross wages will rise by 7.4% (7.6%) in 2026, by 7.3% (7.6%) in 2027, and by 7.5% (7.9%) in 2028. The government’s budget deficit will reach 3.3% (3.5%) of GDP in 2026, rising to 3.9% (3.5%) in 2027 and 4.8% (3.1%) in 2028, the central bank projects.
Meanwhile, Latvia’s Finance Ministry now expects the country’s GDP to grow by 2.0% in both 2026 and 2027 before rising to 2.5% in 2028, LSM reports. In February 2026, the ministry had forecast that GDP growth would amount to 2.6% in 2026, to 2.7% in 2027, and to 2.5% in 2028. Annual inflation will reach 3.6% (2.9%) in 2026, before dropping to 3.3% (2.6%) in 2027 and 2.3% in 2028, the Finance Ministry projects. Latvia’s unemployment rate will amount to 6.6% in 2026, and the ministry expects a further decline in the subsequent years. The country’s average monthly gross wage will increase by 5.5% in 2026, and the ministry expects a similar rate of wage growth in the medium term. The general government budget deficit will amount to 2.9% of GDP in 2026, to 4.2% in 2027, to 5.4% in 2028, to 4.3% in 2029, and to 3.5% in 2030, according to the Finance Ministry’s new forecast.