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New report: 25 years of economic partnership, trade and investment opportunities

26.08.2016  15:49

24 August 1991, Denmark re-established diplomatic relations with Latvia. As we are celebrating the 25 years, we have taken stock of the business relations. In the publication, we present information about bilateral trade and Danish investments in Latvia as well as basic facts about the Latvian economy and its attractiveness.

Latvia’s economy is strong and one of the fastest growing economies in Europe
Since 1992, Latvia’s GDP has more than doubled and is currently around € 5.467 million. In 1992, the Latvian GDP per capita was about 25 pct. of the Danish GDP per capita. Today, it has grown to 50 pct. of the Danish level. Following double-digit growth figures in the 1990’s and the mid-2000s, the Baltic region has entered what some refer to as the “new normal,” with expected growth rates around 3-4 pct.

Danish-Latvian economic relations are again growing positively
Denmark is the 8th biggest foreign investor in Latvia, with accumulated investments worth €656 million in 1Q 2016, equivalent to 5 pct. of all foreign investments in Latvia (2004-2015). This number is increasing, illustrating a continuation of the positive trend following the end of the financial crisis.

Approximately 250 Danish companies are active in Latvia, and come in all sizes, but are primarily small and medium-sized enterprises. Two of these companies employ more than 500 people each.

Danish-owned companies in Latvia had a combined turnover of €575 million in 2015, equivalent to 2.4 pct. of Latvia’s GDP. In addition to this, Danish-owned companies employed a total of 6,330 people, corresponding to 0.7 pct. of the total employment in Latvia.

Danish companies cover a wide variety of sectors. Most are active in the following sectors: farming, wholesale, consultancy, forestry, metal, and transport.

Today, Latvia exports goods and services worth more than €550 million annually to Denmark, making Denmark its 8th biggest export destination. This figure has increased by almost 60 pct. over the last 10 years. In 2015, Latvia imported €517 million worth of goods and services from Denmark, of which approximately 90 pct. are goods within the manufacturing sector.

Latvian production and export to Denmark is part of the value chain and value creation for Danish companies. Many of the companies and local banks in Latvia confirm this as an increasing trend and as a way to improve the competitiveness of the companies.

Why Latvia is attractive to Danish businesses
The frequently cited reasons for doing business in Latvia have to do with the cost and proximity:
     • Price and salary levels are significantly lower than in Denmark
     • More readily available and cheaper raw materials
     • Well-educated work force with a majority, especially younger people, speaking English
     • Cultural differences present, but not overwhelming
     • Close to Denmark and easy to reach
     • Latvia serves as an access point between the East and the West
     • Strong relations to both the Nordic countries and Northern and Eastern Europe
     • Latvia is a strong logistics hub
          o Riga airport is the main airport in the Baltics
          o Air Baltic provides a network of flights into Russia and other Eastern European countries
          o Riga, Ventspils, and Liepaja harbours offer competitive handling and transport

Assistance from the Danish Embassy in doing business in Latvia
For companies that are interested in entering the Latvian market, the Danish embassy in Riga can offer tailor-made services. Through a close dialogue, we aim to identify the needs of the company and develop solutions – through the competences, experience, information, and network of the Embassy – based on those needs.

For further information on these topics, Latvian taxation, special economic zones, security, and local challenges – please see the full report.

Download the full report as a PDF file by clicking here