Foreign direct investment

After Latvia’s accession to the EU, the inflow of FDI increased rapidly and in 2020 reached its highest point (EUR 16.7 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 2019, FDI from the EU states represented 77% of all accrued FDI, including 55% represented by investment from euro-area countries. At the end of 2019 the largest amount of investment was from Sweden – 15% of the total FDI stock in Latvia’s economy. Investment from Estonia, Russia, the Netherlands, Cyprus, Lithuania, Germany, Luxembourg, Denmark and Finland has also reached high levels.

FDI split by sectors shows that most investment is attracted by financial intermediation (23.00%). Others of the largest foreign investments have been accumulated in real estate operations (16%), trade (15%), and manufacturing (12%).

 

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