Shadow Economy in Latvia Grew to 21.8% of GDP
In 2025, Latvia's shadow economy reached 21.8% of GDP, an increase of 0.4 percentage points from the previous year, according to a study by SSE Riga.
The volume of Latvia's shadow economy slightly increased in 2025, accounting for 21.8% of the country's Gross Domestic Product (GDP). This is 0.4 percentage points higher than in 2024, according to the "Shadow Economy Index in the Baltic States" study conducted by the Stockholm School of Economics in Riga (SSE Riga).
The study indicates that the shadow economy remains a significant part of Latvia's economic activity, encompassing unreported income, undeclared wages, and other unregistered transactions. Economists suggest that the uptick could be linked to factors such as tax burdens, the overall business environment, and public trust in institutions.
SSE Riga's annual study is a widely used tool for assessing the scale of the informal economy across the Baltic region. While the latest figures show a reversal of the declining trend seen in previous years, the specific sectors driving this growth have not yet been detailed. The full report is expected to provide more insight into the causes and potential policy recommendations.
