Latvia's Ministry of Finance has adjusted its GDP growth forecast for 2026 from the previous estimate of 2.1 percent to 2.6 percent. This update marks an increase of 0.5 percentage points from last June and is attributed to better-than-expected economic growth in the previous year. The Ministry predicts that the upcoming years will see gradual economic growth in the range of 2.5 to 2.7 percent, driven by various factors including stronger domestic consumption and investment inflows.

The revision of the GDP forecast is significantly based on last year's economic performance, which showed a rapid growth spurred by a remarkable increase in investment activity. In the first three quarters of the year, investments surged by 9 percent, driven by both public investment initiatives and the implementation of projects funded by the European Union. This robust growth in investment has laid a solid foundation for the upward revision of forecasts.

Moreover, after several years of economic stagnation, consumer spending is finally on the rise. Recent data indicates that consumption began to recover in the third quarter compared to the previous year, suggesting that the economic environment is becoming more favorable for households. This resurgence in consumption, alongside increased investments, reinforces expectations for a more sustained economic growth trajectory in Latvia over the next few years.