Best Bitcoin Exchange for Latvia
Latvia (Latvian Latvija) is a state in the Baltic States. As the middle of the three Baltic states, it borders Lithuania to the south, Belarus to the southeast, Russia to the east, Estonia to the north and the Baltic Sea to the west. The capital and largest city of Latvia is Riga.
Since the EU enlargement came into force on 1 May 2004, Latvia has been a member of the European Union and since 1 January 2014 also part of the euro zone.
The Constitution of Latvia (Satversme) is the basic law of the independent democratic Republic of Latvia. In Latvia, the modernised constitution of 15 February 1922 is in force, which has since been partially repealed by the authoritarian government of Karlis Ulmanis in 1936 and then de facto completely by the Soviet occupation of 1940. After the regaining of independence on 4 May 1990, the constitution initially came into force in part and on 6 July 1993 it came into full force again. Since then, the constitution has been amended several times.
Latvia’s constitution is one of the oldest still valid constitutions in Europe; it is the sixth oldest republican constitution in force in the world.
Latvia is a parliamentary democracy. Women’s suffrage was introduced in 1918. The president appoints and dismisses the elected government and represents Latvia vis-à-vis other states. He also acts as commander-in-chief of the armed forces and has the right to initiate legislation, which is used sporadically. He regularly attends meetings of the Cabinet and Parliament (Saeima).
The Prime Minister, who must be elected by a majority of the 100 deputies, is in charge of government affairs and the Cabinet.
The Cabinet consists of 17 ministries and is chaired by the Prime Minister. The Cabinet also includes the respective State Secretaries and the leaders of the political groups of the ruling parties, who do not have the right to vote. The government of Māris Kučinskis took office in February 2016. In the political spectrum, the governing coalition is to be classified as centre-right.
Latvia’s foreign policy is Western-oriented; relations with Russia tend to be strained.
At the EU summit in Copenhagen on 12 and 13 December 2002, the 15 heads of government discussed and decided to admit Lithuania and nine other states to the European Union on 1 May 2004. In a referendum on 20 September 2003, the Latvian electorate voted 66.97% in favour of this plan. Latvia became a member of NATO in April 2004 as part of NATO’s eastward expansion. Riga hosted the 2006 NATO Summit and since then the annual Riga Conference has become a leading forum for Northern European foreign and security policy. The Latvian National Armed Forces (Latvian: Nacionālie bruņotie spēki) are the military of the Republic of Latvia. According to Article 42 of the Constitution of Latvia, the President of the Republic is its supreme leader. In case of war he appoints a commander-in-chief.
Latvia was a member of the League of Nations from 1921 to 1946. Today it is a member of the United Nations, the European Union, the Council of Europe, NATO, the OECD (Organisation for Security and Cooperation in Europe), the International Monetary Fund and the World Trade Organisation and is part of the Schengen area. Latvia is also a member of the Council of the Baltic Sea States and the Nordic Investment Bank. Since the early 1990s, Latvia has been actively involved in trilateral cooperation with its Baltic neighbours, Estonia and Lithuania, and in Nordic-Baltic cooperation with the Nordic countries. The Nordic-Baltic Eight (NB-8) brings together the governments of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Nordic-Baltic Six (NB-6) consists of all Nordic and Baltic countries that are members of the EU and is a forum for discussing EU-related issues.
Latvia has diplomatic relations with 158 countries and has embassies in 35 countries, 37 countries have an embassy in Riga. Latvia hosts an EU organisation, the Body of European Regulators for Electronic Communications.
Latvia is part of the European Single Market. Together with 18 other EU member states (blue), it forms a monetary union, the euro zone.
Latvia’s gross domestic product (GDP) growth has always exceeded six percent since the Russian crisis was overcome (since 2000), especially after EU accession in 2004. In 2005, growth amounted to 10.2 %. Households and companies, however, also accumulated large debts during the boom years. GDP in 2014 amounted to 23.581 billion euros. Per capita this is 11,800 euros (for comparison: Germany 36,000 euros). If one compares GDP according to purchasing power standards (i.e. the purchasing power of one euro) with the EU average (EU-28:100), Latvia reached a value of 64 in 2014 (Germany: 126), the value had risen significantly since 2000 (then: 36). According to the World Bank Latvia ranks 22nd among the most business-friendly countries. In the Global Competitiveness Index, which measures a country’s competitiveness, Latvia ranks 49th out of 138 countries (as of 2016/2017). In the Index for Economic Freedom Latvia ranked 20th out of 180 countries in 2017.
The global economic and financial crisis already made itself felt in Latvia at the end of 2007. The Latvian government reacted with high cuts in government spending and received a capital injection from abroad amounting to one third of the gross domestic product (GDP) In 2008 GDP fell by 4.6 %, in 2009 the economy even collapsed by 14 % – the sharpest decline of all EU states. Between 2007 and 2010, the unemployment rate rose from seven to 21 percent. The number of employees in the state sector fell by 30 per cent, public salaries were cut by 40 per cent. In the first quarter of 2011, the unemployment rate was 17 per cent. Over 2010 as a whole, the economy contracted again by 0.3 %, although slight economic growth has been recorded again since the third quarter. As a result, GDP at the end of 2009 was only 101 per cent of the 2000 figure (the figure after the Russian crisis before the recovery); after the financial crisis, GDP remained at a low level, but seasonally adjusted from the third quarter of 2010 until the third quarter of 2011 it rose again to at least 106 per cent of the 2000 figure.
The Latvian economy grew by 5.5 % in 2011 and by 5.6 % in 2012. However, as a result of the significant economic growth following the previous sharp slump, Latvia’s real gross domestic product (GDP) at the beginning of 2012 was around 91 % of Latvia’s pre-crisis GDP in the third quarter of 2007. The unemployment rate fell to 11.4 % by June 2014. Thanks to a positive overall economic development, the unemployment rate fell to 9.2 % by October 2017.
According to Eurostat, in Latvia in 2010 21.3 per cent of the population were at risk of poverty and 27.4 per cent of Latvians lived in considerable material deprivation (EU-27 average: 16.4 per cent and 8.1 per cent respectively).
Latvia is the poorest country of the three Baltic States.
Foreign direct investment totalled 3.1 billion euros by mid-2004. With total investments of 435 million euros (1st quarter 2004; corresponds to 15 %), Germany ranks first ahead of Sweden, Finland, Denmark, Norway and the USA. This position is largely due to Nord/LB’s expansion into Latvia (own subsidiary). The following large companies and investors are also active in Latvia:
- Banking: SEB (S/shares in Unibanka), Hansabanka (EE-SF), Vereins- und Westbank (D)
- Energy: Ruhrgas/eon and Gazprom (D and RU/share in Latvijas Gaze), Den Norske Stats (N/oil (Statoil)), Shell (UK-NL/oil), Transneftegaz (RU/oil), Neste (SF/oil)
- Real Estate and Retail: LinstowWarner (N/Real Estate), Preatoni Group (I/u. a. Domina Hotels), Polarbek (USA/Radisson Hotel), Stockmann (SF), Kesko (SF)
- Telecommunications: TeliaSonera (S/SF, shares in Lattelekom and LMT (mobile telephony)), Tele2 (S)
various: Rinzai (HKG-SGP/ Acot Industries (metal model making)), SAS (S/DK; shares in Air Baltic)
Young companies and start-ups
According to the World Bank, Latvia ranks 22nd among the most business-friendly countries in the world, making it one of the most attractive countries for new companies. With 72 representatives among the 5,000 fastest growing companies in the world, Riga was rated by Inc. Wirtschaftsmagazin as one of the most successful start-up locations in Europe (7th place). At the end of 2016 the Saeima, the Latvian parliament, passed by a large majority a unique start-up law in Europe. If a company meets the necessary basic criteria, it can benefit from significant tax relief. A recognized start-up company pays a maximum of 252 euros in taxes per employee. Only when the salary exceeds 4050 euros will further taxes be due. The law came into force on 1 January 2017.
Currency and prices
Until 31 December 2013, Latvia’s national currency was the lats (international abbreviation LVL), which was introduced in March 1993 to replace the Latvian rouble, which had been in circulation for one year as a transitional currency. The euro has been in circulation since 1 January 2014, including the Latvian euro coins.
Price developments in Latvia have been moderate since the economic depression (Russian crisis 1998/1999), but have always progressed faster than in neighbouring Estonia and Lithuania, with inflation rates between 2.5% and 3%. With EU accession and strong economic growth, it increased significantly to 6.2 % in 2004 and even more than 15 % in 2007.
As part of the international financial crisis that began in 2007, Latvian citizens were arrested in October 2008 on charges of weakening the national currency through opinions or economic forecasts. But even the suppression of these opinions did not help: the government intervened several times, but unsuccessfully, on the currency market. Attempts to sell further government bonds at the end of May 2009 also failed. On 4 June 2009, the EU Commission officially called on Latvia to reduce its government deficit, and at that time there were even fears of national bankruptcy. The unemployment rate rose to 18.3 % by August 2009, almost three times as high as in the same period last year. Nevertheless Latvia has found a way out of the crisis.
With effect from 1 January 2005, the lats was pegged firmly to the euro at an exchange rate of EUR 1 = LVL 0.702804. The Latvian central bank kept the lats exchange rate within a range of ±1% against the euro until the introduction of the euro. The Maastricht criteria have been met since 2012. In June 2013, the EU Commission signaled Latvia’s admission as the 18th member of the euro zone for the year 2014, in July the introduction of the euro from 1 January 2014 was definitively approved.
The importance of foreign trade (both exports and imports) for the Latvian economy has increased significantly over the last decade. The country relies on “alliances with successful countries” (Sweden, Russia, Germany). Exports amounted to around 6 billion lats in 2011, imports around 7.6 billion lats. The trade balance deficit thus amounts to 1.6 billion lats. Positive balances in services, direct investment and other transfers have reduced this deficit in the balance of payments, but it has remained high. In 2004, trade in goods intensified in particular with its immediate neighbours (Estonia, Lithuania, Russia, Belarus) and with Poland. The main export countries are (2004) Great Britain (13%), Germany (12%) and Sweden (10%), the main export products are wood and wood products (over 30% of exports), metals and metal products (14%) and textiles (11%). The main import countries are Germany (14.5%), Lithuania (12.5%) and Russia (9%), the main import goods are machinery and electrical equipment (20%), mineral products (mainly petroleum, 13%) and vehicles (11%).