Moody’s keeps Latvia`s credit rating level at A3 with stable outlook
According to Moody’s, Latvia’s credit rating is supported by its strong public finances and solid institutions. These are set against challenges related to the country's exposure to external shocks, including geopolitical risk.
According to the agency`s view, the stable outlook reflects balanced risks at the A3 rating level. Latvia's economic and fiscal metrics could improve at a faster pace than the agency currently assumes, in particular if public investment projects are swiftly implemented and reforms to tackle structural challenges in the labour market lead to higher growth potential. Conversely, the country's significant exposure to event risk driven by geopolitical risk, point to potential downside risks should Latvia's credit metrics be permanently affected by a new shock.
Credit rating agency estimates that Latvia’s real GDP contracted by 0.3% in 2024, but real growth will rebound to 0.8% in 2025 and 2.3% in 2026. Moody’s estimates Latvia’s general government fiscal deficit at 2.6% of GDP in 2024 and forecasts a deficit of 3.0% of GDP in 2025 and 2.8% of GDP in 2026, and the public debt ratio to increase to 50.2% of GDP by 2026.
The full press release is available on the Moody`s Investors Service website https://www.moodys.com (registration necessary).