Foreign investments in Latvia

Direct foreign investments in Latvia reached EUR 237 million in Q3 2018, which is 3,1% of GDP, exceeding the average investment level of last year. The biggest influx of funds was noted within trade, woodworking, real estate and construction sector. The largest volume of money came from Netherlands and Estonia.

After formation of a surplus thanks to powerful export growth in the first half of the year, balance switched to negative in Q3 2018. According to Bank of Latvia the main reason for this trade balance deficit is based on a 1,0% increase in export compared to a 7,7% grown in import. The largest influence on deficit increase was noted for trade with countries outside of Eurozone, whereas trade with Eurozone member states was more balanced.

Q3 was less beneficial for exports of services, with significant affected by reduces export rates in finance (-25.1%) and construction (-10.4%) sectors. While decline of export of financial services was caused by the reduction of foreign clients’ deposits in Latvia, it was still expected, whereas the decline of construction services was unexpected. This may be explained with high demand on the domestic market and the limited capacity (workers).