S&P affirms Latvia’s “A” rating with a stable outlook

S&P Global has confirmed Latvia’s sovereign credit rating at A with a stable outlook. According to the agency, Latvia is expected to maintain fiscal discipline and manage external challenges over the next two years.

Key points from S&P:

• The government is expected to stick to a strict fiscal policy and keep public debt at or below 55% of GDP, even as defence spending rises in 2026–2028.

• General government deficit is projected to average 3.8% of GDP during 2026–2028.

• GDP per capita has increased by almost 30% since 2021 — a sign of economic resilience.

• Growth forecast: 1.5% in 2025 and an average of 2.5% in 2026–2028, supported by EU funds and public investment in infrastructure, security, and defence.

• The labour market remains resilient and may tighten further, especially in construction.

S&P’s assessment:

Latvia’s medium-term prospects depend on effective absorption of substantial EU funding and the continuation of structural reforms aimed at strengthening growth potential. The stable outlook reflects the expectation that geopolitical risks will not escalate into the territory of NATO member states.

Why this matters for the Baltics:

A stable “A” rating reinforces regional investor confidence at a time when all three Baltic states are increasing defence expenditure.

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