Latvia’s Manufacturing Industry Shows Resilience Amid European Stagnation
In December 2024, Latvia’s manufacturing sector demonstrated a mixed performance, with 11 out of 21 sub-sectors reporting growth. The wood industry, a cornerstone of the Latvian economy, saw a 3.5% increase, while non-metallic mineral production surged by 15.7%. Food production also rose by 1.7%, and the production of rubber and plastic products skyrocketed by 40.6%.However, the sector faced challenges, with the production of computers, electronic, and optical equipment plummeting by 23.6%.Despite these fluctuations, the overall production volumes in December reached their highest levels for the year, driven by growth in key industries.
The year 2024, however, was marked by a 2.6% decline in total manufacturing production volumes. This downturn was largely attributed to stagnation in the European Union economy, wich dampened demand for Latvian goods and raw materials. The production of metal products and electronics/optical devices saw meaningful contractions, falling by 7.6% and 13.8%, respectively. Yet, not all was bleak.Ten sub-sectors reported growth, with printing (+7.4%),rubber and plastic products (+7.9%),and equipment repair and installation (+17.4%) leading the way.The food production and timber industry remained stable, while non-metallic mineral production increased by 3.5%.
The energy sector also experienced notable shifts. Electricity production in 2024 decreased by 1.1% compared to 2023, primarily due to a 15.4% reduction in hydroelectric power stations.However,cogeneration plants increased their output by 7.6%, and solar panel production surged ninefold, contributing 6.6% of the total electricity generated. This shift towards renewable energy sources aligns with broader efforts to reduce harmful emissions and reliance on fossil fuels.
Despite these challenges, the Latvian manufacturing industry has shown resilience. The European Commission’s Privide index indicates that industrial sentiment improved monthly from July 2023, though it dipped in January 2024 due to lower order volumes. In contrast, the European Union manufacturing industry has faced continuous deterioration as 2022.The S&P Global Eurozone Manufacturing Index reached its highest mark in February 2024, halting eight months of declining orders and production. However, trends across European countries remain uneven.
Looking ahead, Latvia’s manufacturing sector is poised for growth. Production volumes have increased for five consecutive months, and if this trend continues into 2025, the industry could see a significant boost, with growth potentially reaching 5%.
Key Highlights of Latvia’s Manufacturing and Energy Sectors in 2024
Table of Contents
| Sector | Performance |
|———————————|——————————————|
| Wood Industry | +3.5% |
| Non-Metallic Mineral Production | +15.7% |
| Rubber and Plastic Products | +40.6% |
| Electronics/Optical Equipment | -23.6% |
| Total Manufacturing Production | -2.6% |
| Electricity Production | -1.1% (Hydroelectric: -15.4%, Solar: +900%) |
Latvia’s ability to navigate the challenges of a stagnant European economy while fostering growth in key sectors underscores its resilience. As the country continues to invest in renewable energy and adapt to shifting market demands, the outlook for 2025 appears promising.
For more detailed insights into Latvia’s economic performance, explore the latest reports from the Latvian Ministry of Finance and the European Commission.
Latvia’s Manufacturing Resilience: Insights from an Expert
In December 2024, despite a challenging European economic landscape, Latvia demonstrated remarkable resilience in its manufacturing sector. With growth in key industries like wood, non-metallic minerals, and food production, teh nation has shown its ability to adapt and thrive. We sat down with Dr. Janis Berzins, an economist specializing in Baltic economies, to discuss Latvia’s manufacturing performance, energy sector shifts, and the outlook for 2025.
Mixed Trends in Latvia’s Manufacturing Sector
Editor: Dr. Berzins, Latvia’s manufacturing sector had a mixed performance in 2024. While some sub-sectors like wood and non-metallic minerals saw growth,others,such as electronics,declined sharply. What do you think drove these contrasting trends?
Dr.Janis Berzins: The mixed performance reflects both global and local factors. The wood industry, a conventional pillar of Latvia’s economy, benefited from steady demand and efficient resource management. Similarly, the surge in non-metallic mineral production can be linked to infrastructure projects and construction activities.However, the sharp decline in electronics and optical equipment production is tied to broader stagnation in the European Union economy, which reduced demand for these products. Latvia’s reliance on exports makes it particularly vulnerable to such external pressures.
Energy Sector Shifts: Renewables on the Rise
Editor: Latvia’s energy sector also saw meaningful changes in 2024, with a notable drop in hydroelectric power but a massive increase in solar energy production. How do you interpret these shifts?
Dr. Janis Berzins: The 15.4% decline in hydroelectric power was largely due to unfavorable weather conditions,which impacted water levels. However, the ninefold increase in solar energy production is a clear sign of Latvia’s commitment to diversifying its energy mix and investing in renewables. Solar energy now contributes 6.6% of total electricity generation, reflecting significant progress in reducing reliance on fossil fuels and aligning with EU sustainability goals.
Challenges and Opportunities in 2024
Editor: Despite the overall 2.6% decline in manufacturing production, certain sectors like rubber, plastic, and printing showed extraordinary growth. What opportunities do you see for Latvia’s manufacturing industry moving forward?
Dr.Janis Berzins: The growth in sectors like rubber and plastic products and printing highlights Latvia’s adaptability and innovation. These industries have capitalized on niche markets and technological advancements. Additionally, the stability of the food production sector and the growth in equipment repair and installation suggest that Latvia is diversifying its industrial base. Moving forward,continued investment in innovation,renewable energy,and high-value-added industries will be crucial to sustaining this momentum.
Looking Ahead: The Outlook for 2025
Editor: What is your outlook for Latvia’s manufacturing sector in 2025, particularly given the five consecutive months of production growth at the end of 2024?
Dr. Janis Berzins: The five-month growth trend is a positive indicator, suggesting that Latvia’s manufacturing sector is on a recovery path. If this momentum continues, we could see growth rates of up to 5% in 2025. However, this will depend on external factors like the broader EU economic recovery and global market conditions. Latvia’s focus on renewable energy and innovative industries positions it well to capitalize on emerging opportunities and mitigate potential risks.
Conclusion
Editor: Thank you, Dr. Berzins, for your insights.It’s clear that despite challenges,Latvia’s manufacturing sector is resilient and adaptive,with promising prospects for the future. Thank you for sharing your expertise with our readers.
Dr. Janis Berzins: Thank you.Latvia’s ability to navigate economic challenges while fostering growth in key sectors is indeed commendable. I’m optimistic about what the future holds for the country’s manufacturing and energy industries.
