The government is increasingly marked by bickering between the unwieldy five coalition partners that include radical right nationalists, conservatives, populists and liberals. An early election in the Riga municipality in August 2019 led to a change in the mayor’s office, as the center-left Harmony party was replaced by a center-right coalition under the liberal mayor Martins Stakis.

Although the COVID-19 pandemic has damaged Latvia’s tourism and hospitality industry, the economic effects were limited. Negative birth rates, emigration to Western Europe, and rapid urbanization have a detrimental impact on the labor market.

The government swiftly and successfully introduced a series of reforms to the financial sector laid out by the Council of Europe’s Committee on the Evaluation of Anti-Money Laundering and the Financing of Terrorism and thus avoided being placed on the “gray list” of non-compliant countries. However, equally important reforms of the higher education system have still not progressed.

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