Foreign direct investment

After Latvia acceded to the EU, the inflow of FDI increased rapidly and in 2021 reached its highest point (EUR 20.9 billion). The main factors fostering FDI inflow were new market opportunities for foreign investors, stable monetary policy, Latvia’s advantageous geographic location between the EU and CIS countries, and its well-developed infrastructure. After being severely affected by the global financial crisis, Latvia implemented extensive austerity measures. As a result, Latvia’s economy, the confidence of foreign investors, and FDI inflows are on the rise again.

Most of Latvia’s FDI comes from other EU member states. At the end of 2021, FDI from the EU states represented 80% of all accrued FDI. At the end of 2021, the largest investment was from Sweden – 29% of the total FDI stock in Latvia’s economy. Investment from Estonia, the Netherlands, Cyprus, Lithuania, Germany, Luxembourg,Denmark and Finland has also reached high levels.

FDI split by sectors shows that most investment is attracted in professional, scientific and technical services (+955% comparing to 2020 or 22%). Other significant foreign investments have been accumulated in financial operations (15%), real estate operations (14%), trade (14%), and manufacturing (11%).

 

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