Latvia has experience rapid growth and an increase in higher living standards. Over the period 2000-19, GDP growth was among the strongest in the European Union (EU28) and much higher than the OECD average. Unemployment has been decreasing fast from the 2010 peak (19.5%) to 6.3% in 2019, fueling strong growth in real wages. Notwithstanding this good performance, Latvia faces considerable challenges.
Policies to enhance digital transformation have a key role to play in tackling these issues. Digital technologies are an enabler for innovation and productivity in firms, particularly small and medium enterprises (SMEs). Digitalisation may help foster financial inclusion and reduce informality (i.e. economic activities not covered by formal arrangements). It can also help increase the efficiency of the taxation system.
