중동부유럽

Investment has recovered strongly. Following a sharp contraction in 2016, investment recorded double-digit growth in 2017 and the first half of 2018, boosted in part by higher EU funds absorption and contributing to a GDP expansion of above 4.5 per cent.

The reputation of the banking sector has been dented. The ABLV Bank, the third-largest bank in Latvia, is being voluntary liquidated after accusations of money laundering linked to aiding North Korea’s nuclear programme and some illegal activities in eastern Europe.

Tax reform has brought positive results. A more progressive income tax system was introduced from January 2018, which reduces the high tax wedge on low-income earners and improves tax compliance.