Guidance

Overseas business risk: Latvia

Updated 23 February 2024

Information on key security and political risks which UK businesses may face when operating in Latvia.

1. Political and Economic

1.1 Overview

The Republic of Latvia is located in North Eastern Europe. Latvia borders Estonia to the north, Russia and Belarus to the east and Lithuania to the south, and has a Baltic sea coast. The strategic location of Latvia has been a major influence on the country’s diverse history and culture.

Latvia first gained its independence in November 1918. From 1940 to 1941 it was occupied by the Soviet Union under the provisions of the 1939 Molotov-Ribbentrop Pact with Nazi Germany, then by Nazi Germany from 1941 to 1944, and again by the Soviet Union from 1944 to 1991.

Latvia once again proclaimed its independence on 4 May 1990, but it was not until 21 August 1991, that Latvia approved its constitutional law and proclaimed itself a fully independent country.

1.2 Political

Latvia is a unitary parliamentary republic, divided into 43 regions. The capital and largest city, both in Latvia and in the Baltic states, is Riga. With a population of 1.9 million Latvia is one of the least-populous members of the European Union. Latvia has been a member of the United Nations since 17 September 1991; of the European Union since 1 May 2004 and of NATO since 29 March 2004. On 28 July 2016, Latvia became a member of the OECD. The 100 seat unicameral Latvian parliament, the Saeima, is elected every 4 years.

The President is elected by the Saeima every four years. The current President of Latvia is Edgars Rinkēvičs who took office on 8 July 2023. The President nominates a Prime Minister whose appointment, together with the cabinet, must be approved by a vote in the Saeima. Officially, the Prime Minister is the third highest public official after the President and the Speaker of the Saeima, however, in terms of political influence, the Prime Minister holds the most important position in Latvia. Prime Minister Evika Siliņa was appointed Prime Minister of Latvia in September 2023. The most senior civil servant in Latvia is the Director of the State Chancellery, and the most senior civil servants in each of the Government ministries are known as State Secretaries.

1.3 Economic

After years of economic stagnation in the early 1990s, Latvia enjoyed a period of record-breaking growth following its accession to the EU in 2004. Latvia’s GDP growth peaked at 12.2% in 2006, and average annual wages increased by 19.9% in 2007. But domestic demand grew excessively, especially private consumption and real estate investment, fuelled by cheap credit. The economy developed imbalances that were exacerbated by the global financial crisis. GDP growth became negative in 2008 and a contraction of 18% in 2009 was recorded - the highest in Europe. In December 2008, the Latvian Government secured a €7.5 billion loan from the IMF/EU and began measures to stabilise the economy, including structural reforms. In the first quarter of 2010, after exports and industrial production picked up, Latvia’s GDP recorded its first quarter-on-quarter growth in nearly two years. In 2014, Latvia joined the Eurozone. In 2019, GDP growth reached 2.2%. In 2020 due to the global Covid-19 pandemic, Latvia experienced a GDP decline of 3.6. Following Russian invasion of Ukraine in February 2022, Latvia experienced persistently high inflation, peaking at over 20%. Inflation is expected to moderate in the second half of 2023, down to single digits.

During 2022, prices of natural gas grew tenfold, but have now normalised. In addition to the global spike in energy prices, Latvia also banned imports of Russian gas at the beginning of 2023. Latvian GDP is projected to grow by 1.4% in 2023, and 2.8% in 2024, according to the European Commission forecast.

Historically, Latvia has benefited from east-west trade flows. The current geopolitical situation has diminished Latvia’s role as a transit state and nudged Latvian businesses to redirect exports away from Russian and Belarusian markets. In 2022, companies exporting goods to Russian Federation dropped from 369 at the beginning of the year to 220 at the close. Importing companies dropped from 556 to 193.

Key Latvian goods exported to the UK are wood and articles made of wood, refined oil, organic chemicals and miscellaneous metal manufactures. Key services imported to the UK from Latvia are travel, transportation, manufacturing and other business services. In 2022 the UK remained Latvia’s 7th largest export market, totalling £1.6 billion of exports (an increase of 17.8%).

Key UK exports to Latvia in 2022 were beverages, cars, aircraft, textile fibres and ships. Key services exported from the UK to Latvia were travel, transport, telecommunications, computer and information services and intellectual property services. Total UK exports to Latvia in 2022 amounted to £608 million (an increase of 1.0%) and Latvia was the UK’s 71st largest export partner.

The latest UK trade and investment factsheets are available here.

Read the guidance Exporting to Latvia for further information.

In the World Bank Ease of doing Business list Latvia is ranked 19th (out of 190 countries).

The UK government can provide finance or credit insurance specifically to support UK exports through UK Export Finance – the UK’s export credit agency. For up-to-date country specific information on the support available see UK Export Finance’s country cover policy and indicators.

More information on political risk, including political demonstrations is available on FCDO Travel Advice.

2. Business and Human rights

As a member state of the EU, OSCE and the UN, Latvia is actively engaged on human rights issues within these organisations. Freedom House ranked Latvia as a “Free” consolidated democracy with a score of 88 out of 100 in its 2023 report. Latvia has been a Member State of the International Labour Organisation (ILO) since 1991 and has ratified 47 ILO International Labour Standards (Conventions), including the eight fundamental Conventions.

Latvian law entitles all workers, except members of the armed forces, to form and join independent trade unions and recognises the right to strike, subject to limitations related to public safety. The law provides for collective bargaining and prohibits anti-union discrimination or employers’ interference in union functions. However, union membership rates are relatively low.

Latvian law prohibits forced or compulsory labour, including by children, and the government generally enforces such laws effectively. Women enjoy the same rights as men. However, in practice women may face hiring and pay discrimination, particularly in the private sector despite a law prohibiting employment discrimination. According to the 2022 World Economic Forum Global Gender Gap Index, Latvia ranks 26 out of 146 countries. Whilst the majority of employers believe in equal opportunities for all employees regardless of their religious beliefs, citizenship, place of residence, gender or knowledge of the official state language, there are some cases of bias.

Since 2018 job advertisements must specify the salary range of a proposed position. The employer also does not have the right to ask for ability in a particular foreign language if it is not necessary for the job (The Labour Act).

Latvia signed the Istanbul Convention, and since November 2023, the Convention has also been ratified. The media has recently focused on cases where women have suffered from domestic abuse and violence without proper help from state institutions.

3. Bribery and Corruption

Under the UK Bribery Act 2010, it is a UK criminal offence to offer, promise, give, agree, receive or accept bribes. The UK can prosecute British Nationals, UK residents, UK Corporate Bodies and Scottish Partnerships irrespective of whether the offending took place in the UK or elsewhere.

In addition, a commercial organisation carrying on a business in the UK can be prosecuted for failing to prevent bribery. This can be the conduct of any person linked to the organisation, whether a UK national, and would include for example employees, intermediaries and consultants. It does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

According to Transparency International’s Corruption Perception Index (CPI), Latvia was ranked in 39th place in 2022. Latvia is represented in Transparency International by the local NGO Delna. Transparency International Latvia/Delna promotes an open, just and democratic society, free from corruption in politics, in business and interpersonal relations.

The main anti-corruption authority in Latvia is the Corruption Prevention and Combating Bureau (KNAB). KNAB regularly collects information about progress achieved in implementation and reports to the Cabinet of Ministers. For more information on KNAB responsibilities and activities, and to report any corruption, please visit their website.

For more advice and guidance about the Bribery Act and some basic effective procedures you can establish to protect your company, see here.

Read the information provided on our bribery and corruption page.

4. Terrorism Threat

There is a low threat from terrorism. But you should be aware of the global risk of indiscriminate terrorist attacks which could be in public areas, including those frequented by expatriates and foreign travellers. Read the information provided on the Terrorism Section of the Travel Advice for Latvia.

5. Protective Security Advice

There have been reports of petty theft and robbery. Beware of pickpockets, avoid unlit streets and parks at night, and be extra vigilant if walking alone. Most thefts have been reported in Riga Old town, Central Market, central train and bus stations. You should remain particularly vigilant in these areas. Read the information provided on our Safety and Security Section of the Travel Advice for Latvia.

6. Intellectual Property

IP rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

Several government institutions are responsible for the protection of intellectual property rights in Latvia. The Economic Police, reporting to the Ministry of the Interior, deal with infringements of intellectual property rights.

The Ministry of Justice is in charge of the Patent Office, which is responsible for the protection of industrial property rights: the protection of trademarks, brands, industrial designs, semiconductor topography and indications of geographical origin. The Patent Office shall admit and examine applications for the legal protections of inventions, industrial designs and trademarks, grant patents and certificates of trademark registration. The Patent Office shall adopt regulations, advise legal entities and natural persons, compile and publish its official publication and cooperate with foreign and international organizations involved in the legal protection of industrial property.

Copyrights and related rights fall within the competence of the Ministry of Culture and non-governmental organisation Copyright and Communication Consulting Agency/ Latvian Authors Association (AKKA/LAA) Copyright and Communication Consultations Agency/ Latvian Copyright Agency.

The Ministry of Agriculture is responsible for the protection of plant varieties and the geographical indications of foodstuffs and agricultural produce.

Cases of unfair competition are reviewed by the Ministry of Economics and the Competition Council.

The Ministry of Transport is responsible for issues related to domains, servers and downloads.

The State Revenue Service deals with cases of infringement, seizure of fake goods and industrial intelligence.

The Prosecutor’s Office and courts take charge of the investigation and trial of infringement cases.

Read the information provided on our Intellectual Property page.

7. Organised Crime

Criminal groups active in the Baltic countries work as a bridge between criminals operating, in Russia, Belarus and Ukraine and the EU criminal environment. They look towards both the west and the rest of the EU, and towards the east and beyond the borders of the EU.

Cross-border law enforcement cooperation can be lengthy and cumbersome due to the different types of legislation on either side of Latvia’s border. As a result, cross-border operations can occur by certain organised crime groups and markets. A large volume of transport across the borders and other vulnerabilities of the logistics sector can lead to further trade fraud in this region.

The main institutions in Latvia which fight against various forms of organised crime include the Tax and Customs Police Department, the State Border Guard, the State Police and the Latvian State Security Service.

Read the information provided on our organised crime page.

8. Contact

For further information regarding conducting business with Latvia, contact the Department of Business and Trade (DBT) team in the country.