Latvia is a relatively small nation with a dynamic, though recently troubled, economy and a stable political environment. Latvia is similar in size to North Carolina, but with a population of approximately 2.27 million inhabitants. The country provides a potentially attractive market for American IT equipment and services, capital machinery and equipment, medical and consumer products. Located at the center of the three Baltic States, Latvia is a member of the European Union (EU) and provides a strategic location as a commercial, financial, and transportation hub for the Nordic/Baltic region.
The commercial environment is generally friendly to foreign companies, and EU directives are implemented and observed. There are no controls on import, export, or the use and conversion of foreign currencies, which facilitates investment and repatriation of profits. The Latvian government has adopted modern laws establishing copyrights, patents and trademarks and the means for enforcing their protection. Telecommunication services are modern, and the real estate market provides both modern housing and business venues. English is the West European language of choice in government and business. Many U.S. companies doing business in Latvia rate the business environment among the best in Central and Eastern Europe. The legal system, tax structures, and trade and other regulations have been significantly modified to harmonize them with EU standards. Most EU directives have been incorporated into the Latvian legislative system. Latvia has been a member of the WTO since 1999. The country joined the EU and NATO in 2004.
The Latvian economy is based on service industries including transportation, information technology, and financial services. At the same time the construction industry plays an important role, as do wood, food, metalworking, and light industries (e.g., textiles). Tourism is growing rapidly.
Currently Latvia is experiencing serious economic difficulties and has received a 7.5 billion euro ($10.4 billion) assistance package from the International Monetary Fund (IMF) and the European Union. The IMF will provide 1.7 billion Euros, the Nordic countries - 1.8 billion Euros, the European Commission - 3.1 billion Euros, and the EBRD and other EU Member States – 0.9 billion Euros. The financial assistance program's terms do not call for monetary policy changes, thus allowing Latvia to maintain its currency's exchange rate peg to the euro. In order to achieve the goals of the program without devaluation, severe fiscal policy tightening is required. Key elements of the government's revised budget and economic restructuring program are the following: immediate measures to stem the loss of bank deposits and international reserves; steps to restore confidence in the banking system in the medium-term and to support private debt restructuring; fiscal measures to restrain inflation, limit government spending and reduce current account imbalances (while also avoiding a substantial widening of the budget deficit due to decreasing revenues and preparing for early fulfillment of Maastricht criteria); and social policy and structural reforms that will rebuild competitiveness and make government more efficient.
American products face strong competition in the Latvian market from EU countries and the Commonwealth of Independent States (CIS). Due to historical trade relations, companies from Scandinavian countries and Germany approach the Latvian market with greater confidence. Government bureaucracy and corruption are seen by the U.S. government as the main impediments to U.S. trade and investment in Latvia. The U.S. hosts the largest Latvian immigrant community in the world, and several Latvian-Americans have returned to Latvia and assumed leading roles in the business community. Latvia became a member of WTO in 1999 and joined the EU and NATO in 2004. They have free trade agreements with 29 countries, including European Union, EFTA, several CEFTA countries and Ukraine. Latvia has also concluded bilateral investment agreements with the majority of European and CEE countries and the United States.
All the above information is a part of an Executive Summary of the Country Commercial Guide.
The guide features:
1. Economic Trends and Outlook
2. Political Environment
3. Marketing U.S. Services and Products
4. Leading Sectors for U.S. Products and Investments
5. Trade Regulations, Customs and Standards
6. Investment Climate Statement
7. Trade and Project Financing
8. Business Travel
9. Economic and Trade Statistics
10. U.S. and Country Contacts
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