The smallest number of foreign investors in nine years plans to increase investments in Latvia 0 11

It was reported that 47% of foreign investors plan to increase investments in Latvia this year, which is the lowest figure since 2017.

Guznieva explained that this year the research focused on two topics - the investment climate and the innovation ecosystem.

The data indicates that investor sentiment is changing significantly: the number of investors actively planning to increase investments has gradually decreased since 2023, when it was 79%. This year, 47% of foreign investors indicated that they plan investments in Latvia.

At the same time, a record number - 37% of investors - indicated this year that their investment plans are still unclear and depend on circumstances.

Guznieva explained that the plans of 37% of investors depend on various factors such as geopolitics, macroeconomic stability, political stability, and the ability of the new government to implement necessary reforms. She emphasized that if the new government manages to "sway these 37% of investors in favor of investments," it would be good news for Latvia.

Guznieva also noted that the main factors for assessing the investment climate are concerns about the geopolitical situation, the political environment, and coalition instability, as well as Latvia's structural strength.

The director of the FICIL emphasized that political instability in the country has a significant impact - uncertainty causes hesitation among foreign investors regarding their future investment plans. Institutional coordination, which is directly related to the ability of politicians to agree on priorities, is also important, noted Guznieva.

The main areas that politicians should focus on are education and retraining, labor force availability, defense, the innovation ecosystem, and the tax system. In turn, as strengths of Latvia for promoting investments, investors pointed to digital infrastructure, labor cost, physical infrastructure, a talented and smart workforce, quality of life, as well as technology and knowledge.

Guznieva reported that the study also examined the collaboration of various stakeholders with entrepreneurs, and although the science and technology sector in Latvia is developing, there is no synergy between them. Foreign investors also expressed concerns that the tax system, which is currently assessed as relatively good, may change.

According to investor indications, the main priorities of the new government should be human capital, education and demographics, defense and cooperation in regional security, tax policy, political stability, predictability and accountability, energy independence, and competitive energy prices.

Guznieva emphasized that considering the government's course over the past four years and the priorities of the new government, it is primarily necessary to think about human capital. This is a long-term challenge.

The study shows that it is necessary to focus on reducing excessive regulation and administrative burdens for business, infrastructure, and large projects, as well as on more effectively attracting foreign investments.

Foreign investors believe that the sectors with the highest innovation potential in Latvia are information and communication services (67%), manufacturing or production (49%), professional, scientific and technical services (44%), agriculture, forestry and fishing (35%), financial and insurance activities (33%), public administration and defense (31%), education (29%), health care and social assistance (25%), as well as electricity, gas supply, heat supply and air conditioning (22%).

Foreign investors believe that Latvia's innovation potential could be unlocked through targeted funding for the development of high-value-added products (40% of survey participants indicated this), commercialization of science, technology transfer initiatives (33%), support for scaling innovations and exports (29%). Additionally, investors believe that the development of clusters of innovative industries, funding for high-risk innovations, tools to increase potential and research capacities, special innovation zones, joint projects for financing research, development and innovations, as well as investments in technological and infrastructure centers would be beneficial.

The study concludes that no political instrument will be effective without government priorities in innovation and competitiveness, as well as without clear indications of priority sectors. There is also a need for ecosystem development, not isolated efforts: a transition from closed, project-based support to coordinated ecosystems involving multiple stakeholders should be made.

The study indicates that government funding is an important incentive for both research organizations and the private sector. It also concludes that it is necessary to attract and develop new talents, eliminate excessive bureaucracy, overregulation, and overly strict administrative procedures.

Commenting on the "Sentiment Index," the director of the Latvian Investment and Development Agency (LIAA), Ieva Jagera, noted that the number of investors indicating that they do not plan further investments in Latvia has decreased from 40% to 16% over the year, while the group of investors actively assessing future investment opportunities in Latvia stands at 37%.

"Latvia has all the potential to become one of the strongest centers of innovation and technology in Northern Europe. Latvia already has internationally competitive enterprises in the fields of deep tech, defense technologies, artificial intelligence, and modern manufacturing, as well as an increasingly strong scientific and innovation ecosystem," Jagera noted.

According to the "EY European Attractiveness Survey 2026," Latvia currently ranks seventh in Europe in terms of foreign investment projects per capita and eighth in Europe in terms of jobs created, Jagera noted. This is a very strong signal that international investors continue to see high long-term potential in Latvia even in challenging geopolitical conditions.

"At the same time, the next stage of development will require much greater speed and ambition. Latvia must be able to transform knowledge, research, and technology into globally competitive enterprises much faster. That is why we need new funding mechanisms, closer cooperation between the state, science, and industry, as well as much more active international partnerships in the Baltic and Nordic region," Jagera explained.

She emphasized that in the global economy, it is not individual countries that compete, but innovative ecosystems. Latvia's advantage is its ability to be a flexible, fast, and technologically strong country with very high growth potential.

Data from the "AHK Business Survey 2026" shows that Latvia ranks high in several indicators of business development in the Baltic region, LIAA emphasizes. 56% of enterprises in Latvia forecast an improvement in their business situation in the next 12 months, which is the highest figure in the Baltic region. In Lithuania, 47% forecast an improvement, while in Estonia, it is 35%.

Additionally, 49% of enterprises in Latvia plan to increase investments. In Lithuania, 37% plan to increase investments, while in Estonia, it is 29%. 43% of enterprises in Latvia plan to increase the number of employees. In Lithuania, 33% plan to increase the number of employees, while in Estonia, it is 32%. In these indicators, Latvia holds a leading position among the Baltic states.

The "Sentiment Index" study was conducted in collaboration with the Riga Business School of RTU.