The Finance Ministry of Latvia has revised its GDP growth forecast for the year 2023 from 2.1% to 2.6%, an increase of 0.5 percentage points compared to previous estimates made in June of the previous year. This adjustment comes as a result of the stronger than expected economic growth experienced in Latvia last year, with preliminary evaluations suggesting that GDP growth might have reached around 2%, surpassing the earlier forecast of 1.1%. The increase in growth is significantly influenced by a rise in investment volumes, which grew by 9% in the first three quarters of the year. This surge is attributed to both public investment alongside the realization of European Union (EU) funded projects and an upswing in private investments driven by increased crediting of companies.

In addition to the growth forecast, the Finance Ministry has also revised its inflation expectations for the coming years, predicting an inflation rate of 2.9%. This reflects broader economic trends in the region, as it is becoming increasingly evident that inflationary pressures are mounting, influencing the cost of goods and services within the market. The anticipated increase in inflation may require adjustments in fiscal policy strategies to manage the impact on consumers and businesses.

Moreover, private consumption, which had stagnated for several years, has also seen a resurgence, marking a 1.8% increase in the third quarter compared to the same period from the previous year. Additionally, the external sector has strengthened with increasing demand for goods and services, suggesting a more robust economic landscape for Latvia as it adapts to evolving conditions both domestically and internationally. These developments indicate a positive trajectory for Latvia's economy, though challenges related to inflation and sustained investment growth remain critical concerns.