Nation at a Glance - Latvia

History

Several eastern Baltic tribes merged in medieval times to form the ethnic core of the Latvian people (ca. 8th-12th centuries A.D.). The region subsequently came under the control of Germans, Poles, Swedes, and finally, Russians. A Latvian republic emerged following World War I, but it was annexed by the USSR in 1940 - an action never recognized by the US and many other countries. Latvia reestablished its independence in 1991 following the breakup of the Soviet Union. Although the last Russian troops left in 1994, the status of the Russian minority (some 26% of the population) remains of concern to Moscow. Latvia acceded to both NATO and the EU in the spring of 2004; it joined the euro zone in 2014.

Location: Eastern Europe, bordering the Baltic Sea, between Estonia and Lithuania

Border Countries: Belarus 161 km, Estonia 333 km, Lithuania 544 km, Russia 332 km

Total Area: 64,589 sq km Land: 62,249 sq km Water: 2,340 sq km

Climate: Maritime; wet, moderate winters

Terrain: Low plain

Natural resources: Peat, limestone, dolomite, amber, hydropower, timber, arable land

Land use: Agricultural land: 29.2% arable land 18.6%; permanent crops 0.1%; permanent pasture 10.5% Forest: 54.1% Other: 16.7% (2011 est.)

Ethnic groups: Latvian 61.1%, Russian 26.2%, Belarusian 3.5%, Ukrainian 2.3%, Polish 2.2%, Lithuanian 1.3%, Other 3.4% (2013 est.)

Languages: Latvian (official) 56.3%, Russian 33.8%, Other 0.6% (includes Polish, Ukrainian, and Belarusian), Unspecified 9.4%

Religions: Lutheran 19.6%, Orthodox 15.3%, other Christian 1%, Other 0.4%, Unspecified 63.7% (2006)

Population: 1,965,686 (July 2016 est.)

Literacy: 99.9%; Male: 99.9%; Female: 99.9% (2015 est.)

Administrative divisions: 110 municipalities (novadi, singular - novads) and 9 cities

Economy: Latvia is a small, open economy with exports contributing more than half of GDP. Due to its geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronics industries. Corruption continues to be an impediment to attracting foreign direct investment and Latvia's low birth rate and decreasing population are major challenges to its long-term economic vitality. Latvia's economy experienced GDP growth of more than 10% per year during 2006-07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the slowing world economy. Triggered by the collapse of the second largest bank, GDP plunged by more than 14% in 2009 and, despite strong growth since 2011, the economy took until 2017 return to pre-crisis levels in real terms. Strong investment and consumption, the latter stoked by rising wages, helped the economy grow by more than 4% in 2017, while inflation rose to 3%. Continued gains in competitiveness and investment will be key to maintaining economic growth, especially in light of unfavorable demographic trends, including the emigration of skilled workers, and one of the highest levels of income inequality in the EU. In the wake of the 2008-09 crisis, the IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro in exchange for the government's commitment to stringent austerity measures. The IMF/EU program successfully concluded in December 2011, although, the austerity measures imposed large social costs. The majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises, including 80% ownership of the Latvian national airline. Latvia officially joined the World Trade Organization in February 1999 and the EU in May 2004. Latvia also joined the euro zone in 2014 and the OECD in 2016.

Agriculture - products: Grain, rapeseed, potatoes, vegetables; pork, poultry, milk, eggs; fish

Industries: Processed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics