Latvia - a safe environment for investments, residents and guests
International companies of various industries continue to enter Latvia by choosing to open production facilities or branches, high-level international events are taking place, the volume of direct investment is growing and all restrictions on Covid-19 have been lifted. Latvia is safe and open to international business, investment and tourism. This is confirmed by the large-scale transactions that have already taken place and are planned, as well as the forecasts of experts for the tourism sector and the economy as a whole.
Cultural events, international conferences and forums return to Riga at full capacity
This summer (June 20-21), the Three Seas Initiative summit and the Business Forum will take place in Riga, with the aim of promoting practical cooperation to implement priority projects in the fields of transport, energy and digital communications. The United States, Germany and the European Commission are participating in the summit as partners. The annual International Security and Political Forum “Riga Conference 2022” will take place in the autumn (October 21-22), bringing together participants both in person and remotely. The event is jointly organized by the Latvian Transatlantic Organization, the Ministry of Defense and the Ministry of Foreign Affairs. The year 2022 also marks a number of ambitious events in the field of culture - in July the international folklore festival “Baltica” will take place in Latvia, as well as the 22nd International Festival of Improvisation, Jazz and Global Music “Rigas Ritmi” and the music festival “Positivus” will bring together dozens of internationally renowned performers.
More than a hundred direct flight destinations and 120 cruise ship visits
Not only are ambitious events returning to Latvia, but it is becoming more and more accessible as a destination. Since the end of March, a new airline has been operating at Riga Airport - the Dutch Transavia Airlines C.V., which will operate three times a week on the Riga-Amsterdam route, thus providing an even better Baltic connection with one of the most popular transit airports in Europe. At present, Riga Airport offers connections to more than 100 direct scheduled and charter destinations and continues to develop as a fast-growing hub in Northern Europe. Not only flights but also seafaring. In April 2022, the first ship of this year's tourist season "MV Hamburg" with 324 passengers arrived in the port of Riga. According to the estimates of the Port of Riga, 120 cruise ship visits are planned this season, bringing up to 130 thousand passengers to Riga.
Several ambitious projects are being developed
The economic recovery from the Covid-19 crisis has been more rapid than expected last June. This is ensured both by the strong growth of investments in the amount of 7%, which is promoted by the implementation of projects financed by the European Union, and by a number of companies from different countries entering the Latvian market. The Rail Baltica project also contributes to the economic development of the region, including GDP growth with various direct, indirect and inducing effects from infrastructure investments. It is an important catalyst for sustainable economic development in general and will have a positive impact on a number of sectors.
An important step in the expansion of the Latvian business environment is also the development of the project “Preses Nama Kvartāls” on the left bank of the Daugava, which is planned in three phases and a permit for the second phase of construction has already been received. The multifunctional center, scheduled to be completed in 2022, will combine retail, sports and medical services, dining areas and a unique football pitch, as well as public recreation areas. The total cost of the first round is estimated at more than € 100 million.
Direct investment is growing significantly
In 2021, Latvia's gross domestic product (GDP) had increased by 4.8% compared to the previous year. Direct investment also increased significantly over the past year, from around € 17 billion in the first quarter to € 21 billion in the fourth quarter[1]. Although only the first quarter of 2022 has passed, several international brands have started or expanded in Latvia - tour operator “Join Up”, innovative financial technology company “ESTO”, urban supply company “Ziticity”, optical equipment manufacturer “Pulsar Optics”, and real estate property developer “Hepsor”, which has invested 13 million in the construction of a new business complex, and others. It is also planned that by the end of the year, the Swedish technology company “Anodox Energy Systems” will start operating in Latvia with the plan to build an electric car battery plant in the territory of the Port of Riga within the next three years. In April, the Hampton by Hilton Riga Airport hotel worth 14 million euros opened its doors in Riga.
The potential of the economy is assessed profoundly by the experts
Despite the geopolitical situation and challenges in supply chains, Latvia's GDP growth is projected at 1.7% this year but will accelerate to 3.5% next year. Experts remain optimistic about the following years, as the potential of the economy as a whole has not disappeared. Already in 2021, there was a moderate increase in production volumes and structural diversification in the industrial sector, which allowed small high-tech sectors to grow as well. Overall, 2022 is projected to be better than before for a number of retail sectors, such as hotels and restaurants, leisure and culture, which will no longer be hampered by pandemic constraints. Experts estimate that the hotel, restaurant and event industry as a whole will definitely grow in 2022 compared to the previous year. Last year, only half of the value added in 2019 remained, a return to this level is possible already in 2023.
NATO presence and investment as a guarantee of security
NATO's presence in the region is a guarantee of defense, the integration of national and Allied forces into defense missions is constantly being improved, and Article 5 of the NATO Treaty is valid without reservation, as is the mutual defense clause in the Treaty on European Union. At the beginning of March, it was 18 years since Latvia became a full member of NATO. Defense and security experts also point out that in the current geopolitical situation we can feel safe - the security of the entire Eastern bloc is being strengthened and the readiness to send additional soldiers and military equipment to Latvia has been increased.
Stable situation in cyberspace and investment environment
Being part of the EU and NATO, increasing the national defense budget to 2.5% of gross domestic product (GDP), ensuring a stable situation in the field of cyber security, Latvia has proven to be a safe destination for travelers and investments. In the Corruption Perceptions Index (CPI) compiled by the international anti-corruption organization Transparency International, Latvia's position improved last year, ranking 36th among 180 countries. This is not only the highest indicator in recent years, but also a confirmation of Latvia's anti-corruption activities.
[1] Data of the Bank of Latvia, March 2022
