Latvia, a corridor between the West and the East, especially in the transport sector. Such a vision of the development of the country had defined economic policy for years. As the war in Ukraine began, it was clear that an iron curtain would be drawn between the European Union and Russia, and that no lasting development cooperation with the aggressor was imaginable.
More active business foreclosure was recorded last year in imports, where in 2023 the lowest indicator has been reached since 2006. In exports, however, the figures are still high enough in monetary terms and exceeded 1.3 billion euros last year. According to estimates of the Ministry of Finance, last year's import rate constituted 1.6% of the total economy, while exports – 3.1%.
Bank Citadele economist Mārtiņš Āboliņš commented that “if there were a complete, complete breakdown of relations in one year, then we would probably have a year again without growth in the economy. This year we expect some growth – one and a half, two percent”.
“As a one-off shock to the economy, of course that would be felt. But is it absolutely critical, without which Latvia's economy cannot exist – well, no. For us, export markets are basically Western markets. These are also the markets where we have growth that we need to focus on and where we need to develop,” believes Āboliņš.
Ending commerce with Russia would have a far more significant impact than other areas on the transport sector, experts said. Both the railways and much of the ports have depended on Russian cargo for years.
The Ministry of Transport has already gathered the impact of ending trade with the aggressor, but the Ministry does not want to reveal this data now.
Stopping trade with Russia would also have an impact on other areas, but not as much as in transport.
According to the forecasts of economists surveyed by LTV “Panorama”, if trade ties with Russia are fully broken, up to 20,000 people or about two percent of the total number of employed in Latvia could lose their jobs.
“The impact of this would be felt in two places. Or two and a half. Ventspils - Ventspils port, still has some role to play in the city's economy. This impact would also be felt in Daugavpils, where a large part of the employees of the Latvian Railways live,” – said the economist of Luminor Bank Pēteris Strautiņš.
“There could also be a moderate impact in Rezekne, which is also a significant railway hub and cargo handling site. [..] Rīga also has quite a large number of transit-related jobs, but against the background of the Riga economy this would not cause huge problems,” said Strautiņš.
When it comes to ending commercial activity with Russia, it is also important to see how much we can ban ourselves and how much is regulated by the rules laid down by the European Union. There are currently no specific answers to these questions.
