FX.co ★ Latvia Economy Exits Recession in Q2

In the second quarter of 2025, Latvia's economy experienced a notable 1.7% year-on-year growth, defying the initial forecast which anticipated a 0.3% decline and following a 0.3% decrease in the last quarter. This marked the first period of expansion after three consecutive quarters of contraction, thanks to significant contributions from gross capital formation, which surged by 22.3%, and government spending, which grew by 2.0%. Conversely, household consumption experienced a slight reduction of 0.3%. In terms of net external demand, import activity rose by 7.1%, outpacing export growth, which stood at 2.3%. On a seasonally adjusted quarterly basis, the economy grew by 0.4% in the second quarter of 2025, up from a 0.1% increase in the previous quarter.