Analysts from the largest Latvian banks predict an improvement in the economic situation in Latvia in 2026.
An acceleration in gross domestic product (GDP) growth is expected, along with a slowdown in consumer price growth, primarily due to a decrease in the rate of food price increases. At the same time, the labor market will become more active, but the pace of wage growth in 2026 will continue to slow down, although it will remain quite high.
Bank analysts expect that Latvia's GDP may grow faster next year than in 2025 - by 1.9-3%. In particular, "Luminor Bank" forecasts GDP growth of about 3%, "Swedbank" - 2.3%, and "SEB banka" - 1.9%. The Bank of Latvia's forecast for economic development in Latvia next year is also within this range and leans towards the optimistic side - the Bank of Latvia predicts GDP growth of 2.8%.
Economist of "Luminor Bank" Peteris Straujinsh notes that several factors currently indicate that economic growth in 2026 is more likely to accelerate than to decline. The indicators of key sectors of the economy will be quite stable, without standout performers. "Swedbank" expects that the average annual inflation in Latvia in 2026 could be 3%, "Luminor Bank" - 2.5%, and "SEB banka" - 2.4%. At the same time, the Bank of Latvia expects faster growth in consumer prices than bank analysts, forecasting average annual inflation of 3.2%.
Chief economist of "Swedbank" Liva Zorgenfreya notes that relatively low world prices for oil and gas, a gradual decrease in world food prices, a continuing decline in Chinese export prices, and a strong euro will all contribute to slowing inflation in 2026. However, the world price of coffee remains at a record high, which means that coffee in Latvia will also be relatively expensive for some time. The decrease in food prices in Latvia in 2026 will be due to a reduction in the value-added tax (VAT) rate on certain products.
"Overall, we forecast that food prices will rise at about the same pace as overall inflation in 2026, that is, significantly slower than in 2025," says Zorgenfreya.
"Swedbank", "SEB banka", and "Luminor Bank" expect that the average gross salary in Latvia will increase by about 7% in 2026. The Bank of Latvia expects faster growth - by 7.6%. "Swedbank" expects that the actual unemployment rate in Latvia will decrease to 6.6%, "Luminor Bank" - to 6.3%, while "SEB banka" forecasts unemployment at 6.2%. At the same time, the Bank of Latvia predicts that unemployment in Latvia will be 6.6% of the economically active population by the end of 2026.
