Analytics, EU – Baltic States, Financial Services, Investments, Latvia, Rating

The outlook on the rating remains stable.

R&I says that the upgrade for Latvia`s credit rating reflects government-implemented fiscal policies, stability of the financial and banking systems and economic growth. Moreover, despite geopolitical risks, slow absorption of European Union funds and higher wages, Latvia will continue to show stable economic growth.

“Looking back to 2017, we can conclude that Latvia's economic growth has increased substantially, reaching the strongest growth over the last six years. In 2018, strength for the national economy will ensure implementation of the Tax Reform, which is a historic step towards to a stronger and more competitive state. So far, the 3 major credit rating agencies have evaluated Latvia in A rating group, but with Japanese rating agencies R&I rating upgrade for Latvia, we are pleased that Latvia is a full-fledged A rating country,” Finance Minister Dana Reizniece-Ozola (Greens/Farmers) commented.

R&I notes that over the medium-term, demography will come into the focus of attention as the population of Latvia continue to decline due to negative natural growth and the emigration of the working-age population to other European Union member states. The shrinking population could have a weigh on social security and healthcare spending and also hamper economic growth, the ratings agency warns.

R&I positively evaluate the implemented tax reform, although reminds that actual results of the reform will be seen only after a while.