New businesses actively spring up in Latvia

2021 shows a positive trend in the statistics of new companies, as their number is growing slowly, Latvian Radio reported January 11.

Last year, 9,227 new companies were registered, 3% more than in 2020. A Lursoft study finds that 92% of all companies registered last year are limited-liability companies.

Daiga Kiopa, a member of the board of Lursoft, welcomed the increase in 2021. She told Latvian Radio: “It is not a significant increase, but nevertheless, given how fragile economic activity and the experience in business was last year, it is a positive trend. If we look at the companies that have been liquidated, it should be said that the statistics here are somewhat bleaker since compared to 2020, 21% more companies have been eliminated last year and in total 14,159 companies have been removed. These are mostly companies that are not economically active."

Similar to previous years, a fifth of all the liquidated companies were linked to the trading sector, followed by construction. Last year, however, public catering service providers also joined these two sectors.

“The critical age at which companies are often faced with liquidation or termination is five to seven years old. Of course, the impact of the pandemic also shows that companies tend to eliminate much more quickly because they are unable to overcome the constraints or impacts created from these circumstances,” Kiopa said.

Luminor's economist Pēteris Strautiņš said that the Covid-19 pandemic changed the structure of the economic sector. The share of hospitality and catering in the economy decreased significantly, while the share of IT services, industrial services increased.

"If the economy is changing, needs are changing, there are opportunities for the supply of new goods, services, new market niches [..]. Some people lost their current business, lost their income, and had to look for something else. The fact that something good comes from something bad – such precedents have already occurred in the history of Latvia's economy,” the economist said.

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