Fitch keeps Latvia's credit rating at 'A-' with positive outlook

Rating agency Fitch assessed Latvia's current economic outlook at 'A-' on July 28, keeping it the same as the previous one of February this year and those of last year, and revising the outlook from stable to positive.

Fitch mentioned Latvia's efforts in achieving energy independence. 

"Latvia has eliminated its historical reliance on Russian energy imports and reduced its non-energy trade links, although they remain a potential source of vulnerability. The share of trade with Russia had fallen to 5.9% of total goods exports and 2.3% of total goods imports in May 2023, from 10.9% and 9.7%, respectively in 2014. Latvia remains exposed to a potential renewed energy price shock. Rapid pass-through of high energy prices to the real economy resulted in the third highest inflation in 2022 among all EU sovereigns (at 17.2% vs. EU average at 9.2%)," Fitch said.

The agency forecast inflation to fall rapidly and the fiscal deficit to narrow; however, "significant risks remain including the speed and extent of the disinflation path, the near-term growth outlook, the implementation of fiscal consolidation and geopolitical risks."

Fitch expects Latvia's GDP growth to be around 3% in 2024-2025, supported by an acceleration in investment as EU funds absorption advances and private consumption recovers.

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