Ministry publishes medium and long-term economic forecasts

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The Ministry of Economics (EM) forecasts Latvia's economic growth between 2022 and 2030 on average by 4.2% per year, while this year Latvia's unemployment rate is projected to drop to 7.1%, according to the average and long-term labor market forecasts of EM published July 6.

The Ministry's forecasts show that overall unemployment will continue to decline in both the medium and long term, and could fall below the 7% mark in 2023. Overall, unemployment in both the medium and long term will be close to its natural level, or within the range of 5% to 6%.  The unemployment rate was 7.6% in 2021.

The decline in population will be slower by 2040, but the ageing population trend will continue and the working population will be reduced, estimates EM.

The ministry's forecasts show that changing the structure of the economy will increase demand for high-skilled labour, but will reduce the number of low- and medium-skilled jobs.

Overall, by 2040, the share of higher-skilled jobs could increase by around 8.1 percentage points in overall labour demand, while the share of middle - and low-skilled occupations would decline by 3.7 percentage points and 4.4 percentage points, respectively, compared with 2021. Labour demand in elementary occupations could fall by more than 35% or 36.5 thousand jobs by 2040, while average skilled jobs by more than 27 thousand or 7.4%.

The most significant increase in new jobs in the medium term, or by 2030, is expected in professional, scientific and technical services, information and communication services and construction.

Overall, economic growth over the period 2022-2030 is projected by the Ministry to average 4.2% a year, while between 2031 and 2040 an average of 3% a year.

Given the restructuring of labour demand to more knowledge-intensive activities and the narrowing of labour supply, the following major labour market shortcomings are expected:

  • the shortage of higher-skilled science, information and communication technology and engineering professionals could rise to approximately 9.1 thousand by 2030;
  • the surplus of the higher-skilled workforce with education in social, commercial sciences and humanities can grow to around 26.5 thousand by 2030;
  • the shortage of the workforce with secondary vocational training – in the medium term it can rise to around 69 thousand, which will be seen in virtually all groups, particularly engineering and manufacturing;
  • the labour surplus with secondary general education, basic education and lower education levels can reach around 95.8 thousand by 2030.

Labour market forecasts have been developed by the Ministry of Economics since 2008 and are based on economic development and demographic scenarios developed by the Ministry.

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