AGP Executive Report

Economic Outlook: The IMF expects Latvia’s economy to grow 2.3% in 2026—the second-fastest rate in the Baltics—before slowing to 1.8% in 2027. Aviation: airBaltic’s first-half loss widened to €128.2 million despite revenue rising 14.2% to €399.2 million and passenger numbers increasing 15%, intensifying pressure to improve efficiency. Pharmaceuticals: Grindeks invested €1.87 million in a Tallinn packaging line, adding capacity and flexibility across its Riga and Estonian operations. Fintech: Latvia’s central bank has issued more than 20 fintech licences this year as LIAA works to attract more international firms. Defence Manufacturing: The first locally assembled Hunter infantry fighting vehicle has been delivered, with 84 planned by 2029; Patria is also expanding its Valmiera facility to support production. Consumer Costs: EU anti-dumping duties on Chinese tyres are expected to push up prices for Latvian drivers this winter.

AirBaltic: The airline posted a €128.2 million first-half loss, despite revenue rising 14.2% to €399.2 million. High fuel costs were a major drag. Fintech: Latvia’s central bank has issued more than 20 fintech licences since January, as LIAA steps up efforts to attract international firms. Defence Manufacturing: Latvia received its first locally assembled Hunter infantry fighting vehicle; 84 are planned by 2029 under contracts worth €760 million, while Patria is expanding production in Valmiera. Food Exports: A Latvia-origin smoked seafood product was recalled in six U.S. states over possible listeria contamination; no illnesses had been reported. Manufacturing: The producer of Riga Black Balsam faces financial distress, with shareholders due to consider possible insolvency proceedings in November. Industrial Output: Latvia’s industrial production edged up 0.3%.

Defence Industry: Latvia’s defence innovation hackathon runs Oct. 15–17, challenging teams to develop autonomous systems, including technology to detect low-altitude threats. Patria is also expanding its Valmiera vehicle facility, while LIAA is tasked with boosting defence exports and investment. Food and Drink: Riga Balsam producer Amber Latvijas balzams may face insolvency proceedings after first-half turnover fell by a third to €24.6 million and its tax debt topped €28 million. Separately, a US distributor recalled Latvian-origin smoked fish over possible listeria contamination; no illnesses have been reported. Transport: airBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Retail: Lidl Latvia reports €420 million in investment over five years, €305 million in taxes and 1,100 jobs. Manufacturing: Latvia’s industrial production edged up 0.3% in summer.

Food and Drink: Amber Latvijas balzams shareholders will consider insolvency proceedings as the Riga Balsam maker faces falling sales, a tax debt above €28 million and production shifts to Lithuania. Separately, smoked salmon, halibut and trout of Latvian origin have been recalled in six US states over possible listeria contamination; no illnesses have been reported. Defence Manufacturing: Patria is expanding its Valmiera production facility, strengthening Latvia’s role in the regional defence industry. Aviation: airBaltic plans to cut up to 700 jobs as it downsizes its fleet and network. Industrial Output: Latvia’s industrial production edged up 0.3%, a modest rise in summer activity.

Grain Trade: Latvia and its Baltic partners are pressing the EU to ban Russian grain transit, arguing Europe must not help Moscow profit while Ukrainian exports are under attack. Food Exports: A US distributor recalled Latvian-made Starfish smoked salmon, halibut and trout over possible Listeria contamination; no illnesses have been reported. Aviation: AirBaltic plans to cut up to 700 jobs as it reduces its fleet and route network. Defence Manufacturing: Patria is expanding its Valmiera facility, while Latvia is also setting up a state-backed space for defence firms and soldiers to develop ideas together. Industry: Latvian industrial production rose 0.3%, and Lidl says its five-year Latvian operations have brought €420 million in investment and 1,100 jobs.

Pharmaceuticals: Grindeks’ Lithuanian subsidiary, Grindeks Kalceks, earned a “Strongest in Lithuania 2026” rating for its financial reliability and business practices. Defence Industry: Latvia is creating a safe space for companies and soldiers to work on new defence technologies before procurement begins. Patria is also expanding production in Valmiera, while LIAA is tasked with boosting defence exports and attracting investment. Trade & Logistics: Latvia and its Baltic neighbours are pressing the EU to block Russian grain transit, arguing that shipments undermine Ukraine’s trade and can use Baltic routes and infrastructure. Transport & Payments: AirBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Mastercard’s offline-payment system is already operating in Latvia, helping keep card payments available during power or network outages. Economic Conditions: Latvian industrial production edged up 0.3%, while annual inflation held at 3.2% in September. Lidl says its five-year investments in Latvia total €420 million and support 1,100 jobs.

Defence Innovation: Latvia’s new defence “sandbox” lets companies work with soldiers and develop ideas before procurement, without jeopardising future bids. The model is still being tested, while LIAA is also tasked with growing defence exports and attracting investment. Trade and Security: Latvia’s leaders joined Estonia and Lithuania in urging the EU to stop Russian grain transiting through European ports and infrastructure. Latvia has also barred Russian and Belarusian citizens from owning critical infrastructure. Manufacturing: Patria is expanding its Valmiera production facility, strengthening Latvia’s role in defence manufacturing. Aviation: airBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Retail Investment: Lidl reports €420 million invested in Latvia over five years, alongside 1,100 jobs and €305 million in taxes.

Defence Manufacturing: Latvia’s new Defence Ministry-backed centre gives companies and soldiers a space to develop ideas before procurement begins. Patria is expanding production in Valmiera, while LIAA will work to grow defence exports and attract investment. Trade and Logistics: Latvia’s prime minister joined Estonia and Lithuania in urging an EU ban on Russian grain transit, saying Moscow is attacking Ukraine’s export routes while using European infrastructure for its own shipments. Transport: airBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Separately, Air Niugini has welcomed airBaltic A220 pilots to support its new fleet and train local crews. Industry and Retail: Latvian industrial production edged up 0.3%. Lidl says its five-year investment in Latvia reached €420 million, with 1,100 jobs created. Payments: Mastercard’s offline payment system is already operating in Latvia, allowing card transactions to continue during network outages.

Aviation: AirBaltic is sending its first A220 captains to Papua New Guinea as part of a year-long training partnership; 30 pilots are expected to support Air Niugini’s new fleet. Separately, airBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Defence Manufacturing: Patria is expanding its Valmiera production facility, while Latvia’s investment agency will lead efforts to grow defence exports and attract investment. Industry and Investment: Latvian industrial production rose 0.3%, signalling modest growth. Lidl says it has invested €420 million in Latvia, paid €305 million in taxes and created 1,100 jobs over five years. Payments: Mastercard’s offline-payment system is already in use in Latvia and is set to expand across Europe, helping keep card payments available during power or network outages.

Industry and Prices: Latvia’s industrial production edged up 0.3%, while annual inflation held at 3.2% in September. Transport costs rose sharply, but food prices fell. Defence Manufacturing: Patria has started construction of a new Valmiera facility for armoured vehicle production and support. The first Latvian-assembled HUNTER infantry fighting vehicle has also been delivered; the programme calls for 84 vehicles by 2029, with at least 30% local industry participation. LIAA is coordinating efforts to help defence firms win exports and attract investment. Clean Aviation Fuel: NorSAF and Nova Pangaea plan a Latvian plant to turn food waste into ethanol for sustainable aviation fuel, building a local supply chain. Business Security: New rules bar Russian and Belarusian citizens from controlling critical infrastructure processes, including food supply and heat provision. Air Transport: airBaltic plans to cut up to 700 jobs as it reduces its fleet and network. Retail: Lidl says its Latvian operations have generated €420 million in investment, €305 million in taxes and 1,100 jobs.

Defence Manufacturing: Patria has started construction of a new Valmiera facility to build and maintain armoured vehicles, including HUNTER infantry fighting vehicles. Latvia has received the first HUNTER, with 84 due by 2029 and at least 30% local industry participation. Critical Infrastructure: New rules bar Russian and Belarusian citizens from holding significant stakes or influence in key infrastructure processes, including food distribution and heat supply. Business Outlook: Latvia’s industrial production rose 0.3% in the summer, while annual inflation reached 3.2% in September. Investment: Lidl says it has invested more than €420 million in Latvia over five years, creating 1,100 jobs and building a 39-store network. Exports: A new LIAA-led industry group will help Latvian defence companies find international buyers and attract investment.

Retail Investment: Lidl says it has invested €420 million in Latvia over five years, creating more than 1,100 jobs and building a 39-store network supplied by a logistics centre serving Latvia and Estonia. Defence Manufacturing: Latvia’s armed forces have received the first locally adapted “Hunter” infantry vehicle; 84 are expected by 2029, with Latvian industry involved in the programme. AirBaltic Restructuring: The airline is consulting unions on cuts of 500–700 jobs as it shrinks its fleet and network, potentially affecting up to 23% of its workforce. Industrial Output: August production rose 0.3% year on year, led by manufacturing (+7.6%) and mining (+36.1%); electricity and gas output fell 44.6%. Business Growth: Latvian chemical maker Politech is expanding its 4Automotive range across Europe, while Luminor’s €1.8 million loan will help forestry firm LIVO Mežs boost logging capacity and exports.

Retail Investment: Lidl says its five years in Latvia have brought €420 million in investment, 1,100 jobs and €305 million in taxes. Its 39 stores work with more than 120 local producers, and the company plans further expansion. AirBaltic Restructuring: The airline is consulting on cuts affecting 500–700 jobs, or up to 23% of its workforce, as it reduces its fleet and network and refocuses on Riga. Industrial Output: Latvia’s industrial production rose 0.3% year on year in August, with manufacturing up 7.6%. Food production grew 8.9% and fabricated metal products 12.3%, while electricity and gas output fell sharply. Manufacturing Growth: Latvian chemical producer Politech is targeting further European growth for its 4Automotive brand, which offers more than 50 products and is backed by in-house production and R&D. Forestry Expansion: Luminor has provided Sigulda-based LIVO Mežs €1.8 million to expand logging, timber storage and export operations.

AirBaltic Restructuring: Latvia’s airline airBaltic has started a formal collective-redundancy process that could cut 500–700 jobs across Riga, Tallinn and Vilnius as it shrinks its Airbus A220 fleet and refocuses its network. Industrial Pulse: Latvia’s industrial production edged up in August, rising 0.3% year-on-year, with manufacturing up 7.6% and mining up 36.1%, while utilities fell 44.6%. Defence Innovation Funding: The EU Parliament backed the €115m AGILE programme to speed defence tech grants for SMEs, start-ups and scale-ups, with fast-track support and testing/certification access. Recycling & Textiles: Latvia, Estonia and Finland are piloting new ways to collect and sort textile, plastic and e-waste under the €2.64m SustainaCycle project, including mobile collection points in Vidzeme. Energy & Heating: Riga’s RNP plans to start the heating season next week, switching on gradually over three days with no cut-offs due to debts for its managed buildings. Security Tech in Riga: Techritory 2026 in Riga (Oct 21–22) will focus on Europe’s digital security and sovereignty, drawing 600+ speakers. Finance Cyber Alert: South Korea’s regulators flagged suspected AI-assisted cyberattacks at multiple financial firms and launched a monthlong fraud-prevention response, with Latvia among the IP locations flagged.

Government Formation & Security: President Edgars Rinkēvičs said incumbent PM Andris Kulbergs should form Latvia’s new government, with visible progress expected by early November, as the election outcome is framed around strengthening the economy and security. U.S.-Baltic Defense Ties: Saeima speaker Daiga Mierina thanked U.S. Congress for Baltic support, highlighting hybrid threats, illegal migration pressure at the Latvian-Belarus border, and Latvia’s commitment to at least 5% of GDP for defense. Airline Restructuring: airBaltic plans layoffs affecting about 500–700 jobs across Riga, Vilnius and Tallinn as it works through Chapter 11 restructuring and union talks. Circular Economy & Textiles: Latvia, Estonia and Finland are testing SustainaCycle (€2.64m) with mobile waste collection in Latvia and textile sorting pilots in Estonia and Finland, targeting 40 tonnes annually and 60% directed to reuse or recycling. Energy & Heating: Rīgas namu pārvaldnieks will start central heating next week, with gradual switching over three days and no cut-offs due to debts for its managed buildings. Finance Cyber Risk: Latvia appears among 33 IP addresses flagged by South Korea’s financial regulators in suspected AI-assisted attacks on brokerages, insurers and card issuers, prompting internal security reviews. Industry & Trade: Luminor approved EUR 1.8m financing for LIVO Mežs to expand logging capacity, logistics and exports, while eurozone retail sales edged up 0.1% month-on-month, with Latvia down 1.4%. Shipping Security: Two commercial vessels were hit by drones in the Black Sea off Bulgaria, triggering a major search-and-rescue and raising concerns for NATO maritime safety.

Latvian Politics & Security: Andris Kulbergs’ United List is on track for Latvia’s biggest Saeima win since 1991, taking about 35.3% and 41 seats, with turnout at 51.8%—a result framed as continuity on hard-line security and support for Ukraine. EU Budget Fight: Seventeen EU states, including Latvia, Italy and Romania, are pushing back against cuts to cohesion and farm funding ahead of the 15–16 October budget talks. Fintech & Investment: UN:BLOCK Fintech heads to Riga on 15 October, spotlighting MiCA rules, cross-border payments, and how to mobilise Latvia’s roughly €9bn in dormant savings and pension capital. Industry & Manufacturing: Riga-based Millmax is pitching itself as a full-cycle contract manufacturer for cosmetics and supplements, with R&D and production under one roof. Energy & Power: Latvia tops EU renewable electricity shares at 97.7% (hydro and solar leading), according to Eurostat figures. Business Links Abroad: LIAA signed a three-year cooperation with Sherbrooke’s quantum ecosystem in Canada, targeting commercialisation and exports in deep tech and smart manufacturing. Transport Works: A night closure of the Lielupe bridge on the Liepāja highway will run 7:50pm–5:50am, with detours via Jelgava routes.