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PMR Research is a specialised custom market research unit of PMR Ltd., a British-American company based in Poland. We offer a wide range of research services in Central and Eastern Europe for companies interested in business over the countries in the region.
Research services provided by PMR Research in Latvia include:
Business and economic environment Latvia is one of the three former Soviet republics which joined the EU in 2004. It offers a number of opportunities despite its relatively small size as a domestic market. It has the sixth highest per capita GDP in the region, and its skilled workforce, rapid development and low employment costs make it an attractive investment location, particularly for those who would like either to ship products through its Baltic ports or target the Russian market. The latter would be made easier by the fact that most Latvians speak perfect Russian as their first or second language. The more promising areas of the economy include biotechnology, chemicals, pharmaceuticals, food manufacturing, forestry, ICT, mechanical engineering, metal processing and logistics. As an additional benefit, businesses operating in Latvia enjoy a low, 15%, corporate tax rate, the third lowest in the European Union. After a substantial increase between 2000 and 2007, when the economy grew by 8.76% per annum on average, the country’s growth decelerated sharply, from 10% in 2007 to -4% in 2008, -18% in 2009 and -3.5% in 2010. Despite the deep recession, it must be emphasised that Latvia is still one of the most advantageous countries in the region because of its very low employment costs. The value of goods exported from Latvia in 2010 increased by 9.3%, whereas imports increased during the same period by a more modest 2.8%, following a revival of domestic and international consumption. Total FDI (Foreign Direct Investment) in Latvia came to EUR 1bn in 2008, but there was a 94% year-on-year reduction in Q1 2009 to EUR 23.5 million. Corruption is still a problem in Latvia, and, according to the Transparency International index of corruption perception, the Latvian public’s perception of this problem has worsened over the past three years. Whereas in 2008 the CPI (Corruption Perception Index) stood at 5 and the country was ranked the 52nd least corrupt in the world, the 2010 figure was 4.3 and the country fell to 59th position in the ranking. High inflation was a problem in Latvia prior to the onset of the economic crisis. The inflation rate was 10.1% in 2007 and 15.3% in 2008. This was similar to the situation in other countries in the region which faced inflationary pressure caused by unprecedented growth levels after EU accession. However, inflation fell significantly as a result of the recession, to 3.3% in 2009 and -2.0% in 2010. The unemployment rate in Latvia was at an almost natural level, of 5.3% in 2008, but as the recession deepened, there was an increase to 17.3% in 2009 and 21% in 2010. Among the most attractive subgroups of the Latvian economy, the following stand out:
Social environment One of the major advantages of using Latvia as a foothold for further expansion into the Russian speaking countries is the fact that 90% of the country’s citizens speak Russian as either their first or second language and 27.6% are ethnic Russians. This group aside, the major ethnic groups in Latvia are Latvian 59.4%, Belarusian 3.6%, Ukrainian 2.5%, Polish 2.3% and Lithuanian 1.4%. With regard to religious affiliation, 63.7% of Latvians have none, whereas, of the remaining 36.3%, 19.6% are Lutheran, 15.3% are Orthodox and 1% belong to other Christian faiths. The average age in Latvia is 40.6: 43.7 for women and 37.6 for men. The country has a negative population growth rate of -0.6% per annum, and the male/female ratio is 86/100. Latvia’s population is on the wane in part because of emigration, which has reached -2.33 people per 1,000 what reflected nearly a fourth of birth ratio. As a former part of the Soviet Union, Latvia has inherited a legacy of well-developed education based on foundations created during the 1918-1940 era of the independent Latvian state. Today the country has almost 40 higher education institutions, of which 11 have university or equivalent status. Infrastructure and technological environment Latvia has research and development potential in aviation and space-related areas. The system is based on parts of the Riga Technical Institute and the University of Latvia. The country also has a number of institutes in other fields which could provide an R&D base for a potential investor. Latvia depends heavily on fuel imported from Russia (oil, coal and gas) for its energy, as the only fuel found on the country’s territory is peat. It has the capacity to meet only 70% of domestic electricity demand, and the remaining 30% is imported from Lithuania, Estonia and Russia. As much as 43.9% of the electricity produced comes from renewable energy sources, mainly from hydroelectric plants (94% of all renewable energy is generated by three large plants with a total capacity of 1,534 MW). The internet penetration rate in Latvia was 68.2% in 2009. In terms of mobile telecommunication usage, the market penetration rate was slightly more than 100% in 2009. Latvia has a road network consisting of approximately 73,000 km of roads and streets, of which slightly fewer than 12% are national roads. Railway transport involves a 2,300 km network, of which 99% is broad gauge and only 11% is electrified. Political environment Latvia is a parliamentary republic, with a 100 seat Parliament (the Saeima) elected every four years. The Parliament elects a president for a four-year term. The Latvian government is led by the Prime Minister (nominated by the President) and needs a vote of confidence from Parliament. The next Parliamentary elections are to be held in 2014, and the President will be elected in 2011. As an EU member state since 1 May, 2004, Latvia is eligible for Structural Funds which will boost its development. The amount of financial aid available for 2007-2013 is EUR 4.6 bn. The country also has a legal system which has been harmonised with that of the EU. In 2015, Latvia will take over the Union presidency for half a year. Latvia is a member of all major international organisations. General data Area: 64,589 sq km Population: 2.2m (2010) Capital city: Riga Languages: Latvian (official), and Russian is spoken by approximately 40% of the population Ethnic groups: Latvian 59.4%, Russian 27.6%, Belarusian 3.6%, Ukrainian 2.5%, Polish 2.3%, Lithuanian 1.4%, others, 2.1% Major economic indicators
Useful dataCurrency: Latvian Lats (LVL)Exchange rate: (31.12.2008): 1 LVL = 1.423 EUR Time zone: GMT +2 Area code: +371 If you would like to find out more on the Latvian market opportunities please do not hesitate to contact us directly: phone: (48 12) 618 90 80 faks (48 12) 618 90 08 e-mail: [email protected] PMR Business Solutions in Latvia
Latvia market reports To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Latvia. If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs. Latvia market research PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses. Latvia consulting PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
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