Latvia Export/Import Ratio

Latvia’s Foreign Trade in 2023: Key Trends, Trade Partners, and Sectoral Shifts

In 2023, Latvia’s foreign trade experienced notable shifts, with exports totalling approximately €18.94 billion, a decrease of 11.2% from 2022, and imports amounting to €23.2 billion, down 12.5% from the previous year. This resulted in a trade deficit of about €4.26 billion, highlighting Latvia’s continued reliance on imports, particularly in the technology and machinery sectors.

Key Trade Trends and Sectoral Shifts

Export and Import Composition

Key Export Commodities:

• Wood and Wood Articles: A significant portion of exports, primarily to the United Kingdom (20.5%), Sweden (12.4%), and Estonia (7%).
• Electrical Machinery and Equipment: Major export destinations included Lithuania (26.3%), Estonia (12.2%), and Poland (5.2%).
• Mineral Fuels and Oils: Exported mainly to Lithuania (35.9%), Estonia (14.3%), and Finland (12.6%).

Key Import Commodities:

• Mineral Fuels and Oils: Predominantly imported from Lithuania (62.5%), Estonia (10.3%), and Russia (10.1%).
• Electrical Machinery and Equipment: Sourced mainly from Lithuania (14.4%), China (12.4%), and Poland (10%).
• Vehicles and Parts: Imported chiefly from Germany (33.4%), Estonia (17.4%), and Poland (9.7%).

Trade Partners and Regional Comparisons

Latvia’s primary trading partners were Lithuania, Germany, Poland, Estonia, and the Netherlands, collectively accounting for 55.9% of total import value.

Trade within the EU: 

Exports to EU countries constituted 69.1% of total exports, marking a decline of €1.7 billion (11.4%) compared to 2022.

Trade with Neighboring Countries:

• Lithuania remains a major partner for both imports and exports, particularly in machinery, mechanical appliances, and mineral products.
• Estonia and Germany play a significant role in agricultural products, foodstuffs, and machinery trade.

Trade with Non-EU Countries:

• Exports to Russia decreased by 6.2% to €1.12 billion, while imports from Russia dropped significantly by 66.9% to €606.6 million, reflecting geopolitical tensions and shifting trade policies.

Sectoral Growth and Challenges

Despite an overall decline in exports, some industries showed resilience or growth:

• Technology Sector: Comprising 16.2% of total exports, Latvia’s ICT and electronics industries remain vital, though the country maintains a negative trade balance in this sector, highlighting reliance on imported advanced machinery and equipment.
• Renewable Energy: Latvia has increased efforts to diversify energy imports and invest in renewable energy projects, aiming to reduce dependence on imported fossil fuels.
• Pharmaceuticals and Biotechnology: Emerging as a potential growth area, Latvia’s pharma sector is attracting foreign investments, particularly from the EU and Nordic markets.

Impact of Global Economic Conditions

Latvia’s trade balance was influenced by several global factors:

• Energy price fluctuations: The decline in fuel imports suggests a shift in energy sourcing, possibly due to EU energy policies and sustainability initiatives.
• Inflation and supply chain disruptions: As seen across Europe, Latvia faced rising costs in logistics and production, affecting both export and import dynamics.
• Russia-Ukraine war impact: The sharp decline in trade with Russia reflects Latvia’s alignment with EU sanctions and efforts to diversify trade partnerships.

Policy and Investment Responses

To address trade imbalances and economic vulnerabilities, Latvia has taken several strategic steps:

• Investment in Domestic Manufacturing: Government initiatives aim to boost local production capabilities, particularly in high-tech industries and green energy.
• Strengthening Baltic and Nordic Trade Alliances: Increased focus on regional partnerships with Estonia, Lithuania, Finland, and Sweden to enhance trade stability.
• Support for Tech Startups and Export-Driven Businesses: Latvia is increasing funding for export-oriented SMEs and startups, particularly in the ICT, biotech, and cleantech sectors.

For more detailed statistics and information, you can refer to the Central Statistical Bureau of Latvia and the Investment and Development Agency of Latvia.

Source:

• OEC – Latvia   
• Official statistics Latvia, 2023
• LIIA – Foreign Trade Statistics