Mārtiņš Kazāks, Governor of Latvijas Banka, has outlined specific measures that could raise Latvia’s economic growth rate to 4–5%, effectively doubling its current pace.
In an interview with LETA, Kazāks said that Latvia could achieve such growth by implementing several relatively straightforward steps that have long been discussed but not fully executed.
Kazāks noted that Latvia’s macroeconomic outlook is heavily influenced by external factors.
“Geopolitical changes are here to stay. Trade wars, of course, affect us negatively. The external environment is unfavourable,” he said, adding that despite this, both the European and Latvian economies have proven resilient, avoiding a deep crisis.
According to Kazāks, Europe is returning to slow but steadier growth. One reason is the acceleration of Germany’s economy, which is beginning to pull other countries forward. Latvia also benefits from the gradual recovery of the Nordic economies,
key trading partners that are emerging from several years of stagnation.
Kazāks said Latvia’s economy is beginning to recover: unemployment remains low, wage growth is strong, and GDP growth is currently between 2% and 3%.
“That is still a moderate pace. It is lukewarm water — and far from hot. For Latvia, 2–3% growth is simply not enough,” he stressed.
In his view, by implementing already-discussed reforms, Latvia could move closer to 4–5% annual growth.
One key measure, Kazāks said, is simplifying the construction process.
He explained that the necessary regulatory changes are already known and largely adopted on paper — what remains is practical implementation. This could shorten building permit issuance times, reduce costs, and enable projects to be completed faster and more cheaply.
Kazāks also highlighted the importance of strengthening Riga’s role
and fostering closer cooperation between the national government and the capital to attract new businesses.
“Latvia has something unique that neither Lithuania nor Estonia has — the so-called ‘knowledge mile.’ Riga has a significant concentration of universities and students. By enabling this segment to play a greater role in the innovation ecosystem, Latvia could gain new momentum,” he said.
Kazāks emphasised that Latvia should not be afraid of making mistakes.
“We need to act, see what works and what doesn’t. We learn from mistakes and move forward step by step. What works, we continue; what doesn’t, we stop,” he said.
He added that while negligence, inaction and misconduct must be punished, honest mistakes should be treated as opportunities for learning.
“If we punish every experiment, we will not move forward,” Kazāks concluded.
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