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Latvia Economic Snapshot

17 June 2020: Policy actions for affordable housing in Latvia

Housing affordability and quality are pressing challenges in Latvia. While Latvian households spend, on average, less on housing than their OECD peers, many are stuck in poor quality housing. Residential investment has stagnated since 2008, and the housing stock has been insufficiently maintained. In the face of these challenges, public support for housing is limited and an underdeveloped rental market further limits affordable housing alternatives. This report provides an in-depth assessment of housing affordability challenges and identifies policy actions to address them. The report is the result of the work of an interdisciplinary team bringing together the Economics Department and the Directorate for Employment, Labour and Social Affairs. The report contributes to the cross-cutting OECD Horizontal Project on Housing. 

 

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Full Report

Mājokļu pieejamība Latvijā

Economic Forecast Summary (June 2020)

Economic growth slowed before the pandemic started and is projected to contract sharply in 2020, despite a relatively lenient lockdown. Activity will recover, but gradually, as uncertainty will remain high and activity in some service sectors will remain subdued. Domestic demand will drive the recovery, while exports will be slower to pick up due to the severe recession in Europe. Investment will drop and stay low throughout 2021, particularly should a second lockdown be necessary (the double-hit scenario). Unemployment is projected to increase and remain elevated due to a slow recovery of labour-intensive sectors. Public debt will soar but will stay low relative to other OECD countries.

Reform Priorities (July 2019)

The government introduced several measures to reduce regulatory burdens to business, namely the “Consult first” initiative where authorities first provide advice on compliance, before sanctioning businesses. It also passed several laws to promote e-government services and a one-stop shop for administrative procedure for starting a business. The personal income tax system was made more progressive by lowering the rate on low and medium incomes and introducing a higher, income-dependent tax allowance. Public health expenditure is being increased from a low level to improve access to services. The labour market relevance of vocational education has been increased and modular courses were introduced, facilitating access for adult learners. Integration of the electricity and railway networks with EU neighbours is ongoing.

 

29 May 2019 - Economic Survey of Latvia

Economic growth is strong and income convergence continues, even though at a slower pace than before 2008. The labour market is tight, as unemployment fell to its lowest rate in ten years and vacancies are rising fast. Wage growth has been strong supporting household purchasing power. Despite increasing labour costs, Latvian exporters have remained competitive and gained market shares. The macroeconomy appears balanced overall with inflation, public debt and the deficit under control. Financial markets look stable, sustained by sound macroprudential policy.

Executive Summary

 

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