The November 2025 Industrial Production YoY figure for Latvia (LT) came in at 1.80%, surpassing the consensus estimate of 1.00% and improving from October’s 0.20%. This data, sourced from the Sigmanomics database, reflects a rebound after a turbulent year that saw production peak at 8.90% in April before plunging to -2.40% in September. The current reading suggests a stabilization phase amid ongoing global economic uncertainties.

Drivers this month

• Manufacturing output increased by 2.30%, supported by export demand.
• Energy sector production rose 1.50%, aided by mild weather and stable supply chains.
• Construction activity remained flat, limiting broader industrial gains.

Policy pulse

Latvia’s industrial growth remains below the 3% average seen in early 2025 but above the subdued 0.50% baseline typical of late 2024. The reading sits within the European Central Bank’s (ECB) inflation target zone, suggesting moderate price pressures. The ECB’s recent rate hikes, now totaling 125 basis points since mid-2024, are beginning to temper industrial expansion.

Market lens

Immediate reaction: EUR/LTL remained stable post-release, with 2-year government bond yields edging up 3 basis points, reflecting cautious optimism. The LT currency showed mild resilience, supported by stronger industrial fundamentals but offset by external risks.

Industrial production is a core macroeconomic indicator reflecting the health of Latvia’s manufacturing, mining, and utilities sectors. The 1.80% YoY growth in November 2025 contrasts with the sharp 2.40% contraction in September, highlighting volatility driven by supply chain disruptions and fluctuating demand.

Monetary Policy & Financial Conditions

The ECB’s tightening cycle has increased borrowing costs, with LT’s industrial firms facing higher credit expenses. This has slowed capital investment, particularly in energy-intensive industries. The Sigmanomics database shows a correlation between rising policy rates and a deceleration in industrial growth since Q2 2025.

Fiscal Policy & Government Budget

Latvia’s fiscal stance remains cautious, with limited stimulus measures. The government’s budget surplus of 0.80% of GDP in 2025 constrains expansive spending. Infrastructure investments are steady but not accelerating, limiting industrial capacity expansion.

External Shocks & Geopolitical Risks

LT’s industrial sector is vulnerable to geopolitical tensions in Eastern Europe and supply chain disruptions from Asia. Recent sanctions and trade frictions have increased input costs, particularly for raw materials. The 1.80% growth reflects partial adaptation but ongoing headwinds.

Drivers this month

• Export-oriented manufacturing sectors led the rebound, driven by demand from EU partners.
• Energy production gains supported overall industrial output despite supply chain challenges.
• Mining and quarrying sectors remained subdued, limiting upside potential.

Policy pulse

The ECB’s monetary tightening is beginning to weigh on industrial growth, with higher financing costs slowing investment. The 1.80% growth is consistent with a moderate expansion scenario under current financial conditions.

Market lens

Immediate reaction: EUR/LTL currency pair showed minimal movement, while LT 2-year bond yields rose slightly, reflecting cautious market optimism amid mixed signals.

Looking ahead, Latvia’s industrial production faces a complex mix of opportunities and risks. The Sigmanomics database and recent macro data suggest three scenarios:

Bullish Scenario (30% probability)

• Global demand rebounds strongly, boosting exports.
• Supply chain normalizes, reducing input costs.
• Fiscal stimulus increases infrastructure investment.
• Industrial production grows above 3.50% YoY in 2026.

Base Scenario (50% probability)

• Moderate global growth with persistent supply challenges.
• Monetary policy remains restrictive but stable.
• Industrial production grows around 1.50–2.00% YoY.

Bearish Scenario (20% probability)

• Geopolitical tensions escalate, disrupting trade.
• Energy prices spike, squeezing industrial margins.
• Industrial production contracts or stagnates near 0%.

Structural & Long-Run Trends

Latvia’s industrial sector is gradually shifting towards higher value-added manufacturing and green technologies. However, aging infrastructure and workforce constraints limit rapid expansion. Long-term growth will depend on innovation, investment, and integration with EU supply chains.

The November 2025 Industrial Production YoY figure of 1.80% for Latvia reflects a cautious recovery amid a challenging macroeconomic environment. While the rebound from October’s 0.20% and September’s contraction is encouraging, growth remains below early 2025 peaks. Monetary tightening, geopolitical risks, and limited fiscal stimulus pose ongoing challenges. Markets are likely to remain sensitive to shifts in global demand and policy signals.

Investors and policymakers should monitor industrial output closely as a barometer of economic resilience. The balance of risks suggests a moderate growth path with potential volatility. Strategic investments in innovation and infrastructure could unlock stronger long-term gains.

Key Markets Likely to React to Industrial Production YoY

Latvia’s industrial production data influences several key markets, reflecting the country’s integration with European and global trade. The following symbols historically track or react to shifts in LT’s industrial output:

• OMXH25 – Nordic stock index sensitive to Baltic industrial trends.
• EURUSD – Euro-dollar pair reacts to ECB policy and regional economic data.
• EURSEK – Reflects regional trade dynamics impacting Latvia’s exports.
• BTCUSD – Cryptocurrency markets often respond to macroeconomic uncertainty.
• MTEL – Baltic telecom stock, a proxy for regional economic sentiment.

Insight: Industrial Production vs. OMXH25 Since 2020

Since 2020, Latvia’s Industrial Production YoY and the OMXH25 index have shown a positive correlation, particularly during economic recoveries. Peaks in industrial output in early 2025 coincided with OMXH25 rallies above 2000 points. Conversely, industrial contractions in mid-2025 aligned with market pullbacks. This relationship underscores the importance of industrial data as a leading indicator for regional equity markets.

FAQs

What does the latest Latvia Industrial Production YoY figure indicate?

The 1.80% YoY growth in November 2025 indicates a modest recovery in Latvia’s industrial sector after recent volatility, signaling stabilization amid tightening monetary policy.

How does Industrial Production YoY impact Latvia’s economy?

Industrial production reflects manufacturing and energy output, influencing GDP growth, employment, and trade balances. Changes affect investor sentiment and policy decisions.

What are the risks to Latvia’s industrial growth outlook?

Risks include geopolitical tensions, supply chain disruptions, rising energy costs, and restrictive monetary policy, which could slow or reverse growth momentum.

Takeaway: Latvia’s industrial production shows resilience with 1.80% YoY growth, but ongoing external and policy challenges suggest cautious optimism for 2026.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 11/21/25