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Latvia:Political and Economic Situation

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Latvia is a small, open economy with exports contributing significantly to gross domestic product (GDP). Due to geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronic devices. Latvia's low birth rate and decreasing population are major challenges to long-term economic vitality and has notable influence on the education system – creating the necessity to reduce the number of educational institutions by optimising their network and raising overall competitiveness.

The past decade has been a turbulent period for the Latvian economy. From acquiring double digit growth figures before 2008, the country has first experienced a double digit drop in GDP before rebounding to a healthier economy and more focus on socioeconomic challenges.


Economic Crisis and Its Aftermath

From 2008 to 2010 the Latvian economy took one of the sharpest downturns in the world, when the fall of GDP reached 21%. The financial assistance of the European Union, the IMF, and the World Bank supported the economic recovery program. Latvia returned to growth in the latter half of 2010 as a result of economic stabilization measures.

At present, Latvia continues to show rapid and sustainable growth. Latvia still continues structural reforms towards improving competitiveness and productivity.

Current Economic Situation and Near-future Forecast

The overall economic situation over the past years has been exceptional and much better than forecasted. Latvia's GDP in 2014 was 2.3%

Unemployment has been gradually declining from the peak in the 2010. Registered unemployment fell from 17.3% in March 2010 to 8.2% in September 2014. Further gradual decrease is expected to continue over the coming years.

With the 2014 Latvia has joined the Eurozone and the Euro has become the official currency of the country.

Most recent information on the country’s economic situation available at Bank of Latvia Macroeconomic Developments Report.

Latvia’s Presidency of the Council of the European Union

Latvia holds the Presidency of the Council of the European Union in the first half of 2015. The Presidency of Latvia will hold the Eastern Partnership Summit, the Fifth Meeting of the Ministers of Education of the ASEM countries and the Conference of European standardization.

The Influence of Political and Social Situation on Education

Due to notable cut in the education budget during the crisis and taking into account the decrease of the number pupils and students due to socioeconomic and demographic factors significant structural reforms have been performed in the whole education system:

  • In vocational education reduction of the number of institutions and development of vocational training competence centres in regions was started by allocating EU Social and Regional Development Funds for development and adjustment of curriculum and vocational training standards according to labour market needs and modernisation of the teaching supply and infrastructure.
  • And in the field of higher education – both a commitment by the government was made to draft and prepare a new performance-based funding model and EU Social and Regional Development Funds were allocated for improvement and development of study programmes and modernisation of the infrastructure of the higher education.

Due to economic crisis substantial structural reforms were carried out in the organisation and governance of education.

State expenditure on education as % of gross domestic product (GDP)


2000 5.64
2005 5.09
2007 5.02
2008 5.75
2009 5.64
2010 5.01

Source: Eurostat

Proportion of population (aged 25-64 years) participating in education process

2008 2009 2010 2011 2012 2020
6,8 5,3 5,0 5,1 7,0 15,0

Source: Progress Report on the Implementation of the National Reform Programme of Latvia within the “Europe 2020” Strategy, 2013