Latvia experienced political continuity after the 2022 elections, with the center-right New Unity party retaining the prime minister’s office. However, political stability was destabilized by a corruption scandal that ended the political career of former Prime Minister Krišjānis Kariņš. His successor, Evika Siliņa, has led a fragmented three-party coalition marked by internal conflicts, limiting coordination and weakening policy coherence, despite the continued functioning of democratic institutions.
Economic performance stagnated as foreign direct investment was delayed and exports slowed. Large infrastructure projects and state-owned enterprises, notably Rail Baltica and the national airline airBaltic, created significant fiscal pressures. Higher energy prices following the halt of Russian gas and oil imports weighed on households and businesses, although inflation eased by 2024. Latvia continued to lag behind its Baltic neighbors in GDP per capita.
Rising security risks linked to Russia’s war against Ukraine prompted increased defense spending, intensifying budgetary trade-offs. Coalition instability constrained strategic steering capacity, while Latvia remained firmly anchored in European and transatlantic cooperation.
