Latvia is a member of the World Trade Organization (1999) and the European Union (2004). On 1 January 2014, the euro became the country’s currency, superseding the Lats. According to statistics in late 2013, 45% of the population supported the introduction of the euro, while 52% opposed it. Following the introduction of the Euro, Eurobarometer surveys in January 2014 showed support for the euro to be around 53%, close to the European average.
Since the year 2000, Latvia has had one of the highest (GDP) growth rates in Europe. However, the chiefly consumption-driven growth in Latvia resulted in the collapse of Latvian GDP in late 2008 and early 2009, exacerbated by the global economic crisis, shortage of credit and huge money resources used for the bailout of Parex bank. The Latvian economy fell 18% in the first three months of 2009, the biggest fall in the European Union.
The economic crisis of 2009 proved earlier assumptions that the fast-growing economy was heading for implosion of the economic bubble, because it was driven mainly by growth of domestic consumption, financed by a serious increase of private debt, as well as a negative foreign trade balance. The prices of real estate, which were at some points growing by approximately 5% a month, were long perceived to be too high for the economy, which mainly produces low-value goods and raw materials.
Privatisation in Latvia is almost complete. Virtually all of the previously state-owned small and medium companies have been privatised, leaving only a small number of politically sensitive large state companies. The private sector accounted for nearly 68% of the country’s GDP in 2000.
Foreign investment in Latvia is still modest compared with the levels in north-central Europe. A law expanding the scope for selling land, including to foreigners, was passed in 1997. Representing 10.2% of Latvia’s total foreign direct investment, American companies invested $127 million in 1999. In the same year, the United States of America exported $58.2 million of goods and services to Latvia and imported $87.9 million. Eager to join Western economic institutions like the World Trade Organization, OECD, and the European Union, Latvia signed a Europe Agreement with the EU in 1995—with a 4-year transition period. Latvia and the United States have signed treaties on investment, trade, and intellectual property protection and avoidance of double taxation.
In 2010 Latvia launched a Residence by Investment program (Golden Visa) in order to attract foreign investors and make local economy benefit from it. This program allows investors to get a Latvian residence permit by investing at least €250,000 in property or in an enterprise with at least 50 employees and an annual turnover of at least €10M.