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In 2018, Danske Bank projects the Latvian economy to expand by 3.2% and in 2019 to increase by 3.4%.

"[Latvia's] growth this year is the fastest since the first half of 2012. This also makes Latvia one of the most rapidly expanding economies in the EU," the bank said in the report, adding that Latvia's economic growth in the second quarter of 2017 was the same as in the first quarter of the year – 4% year-on-year.

The bank's experts also note that this year the Latvian economy has been showing much more balanced growth than in previous years. The key driver behind growth is consumption, which grew by 4.9% year-on-year in the first half of this year and which is primarily being fuelled by fast growth in wages (+7.9% year-on-year in the first half of 2017).

Equally important this year is strong export performance. Exports of goods and services in the first half of 2017 expanded by 6.5% year-on-year. Exports grew most to Russia, Germany and Sweden, Danske Bank observed.

"Investment this year has also rebounding after two consecutive years of contraction. Investment in the first half of 2017 expanded by 18.5% year-on-year and was driven by higher EU funding, high capacity utilization rates and increasing business sentiment," Danske Bank said in the report.