Latvia Construction Industry Report 2025: Output to Continue on an Upward Trajectory with AAGR of 3.7% Forecast for 2026-2029

The Latvia construction industry is expected to grow in real terms by 2.2% in 2025, supported by investments in transport, electricity, and housing infrastructure projects. The industry is forecast to register an average annual growth of 3.7% from 2026 to 2029, driven by investments in transport and renewable energy projects. The government aims to reduce greenhouse gas emissions by 65% by 2030 and achieve climate neutrality by 2050, with a focus on increasing renewable energy capacity.

The Latvian construction industry is poised for robust growth in the coming years, with real-term expansion expected to reach 2.2% in 2025 [1]. This rebound follows a 6% decline in 2024, reflecting the resilience of the sector in the face of economic challenges.

Driving this growth is a surge in investments across various sectors. Notably, the transport, electricity, and housing infrastructure segments are expected to receive significant attention [1]. In November 2024, Latvenergo, the state-owned energy company, announced plans to complete the construction of a 265MW solar park in Aizpute by 2025, injecting EUR135 million ($143.6 million) into the industry [1].

Moreover, the government's 2025 budget, approved in October 2024, includes substantial allocations for economic activity. With an expenditure of EUR17.1 billion ($18.2 billion), the budget sets aside EUR2.9 billion ($3.1 billion) for maintenance and renovation of national roads, public transport, and the Rail Baltica project [1].

The health, education, and recreation, culture, and religion sectors are also slated to receive substantial investments, further fueling the industry's growth [1]. For instance, the film industry, art and literature, cultural heritage, sports, and other measures will benefit from an allocation of EUR239.4 million ($254.6 million) [1].

Looking beyond 2025, the Latvian construction industry is expected to maintain a strong growth trajectory, with an average annual growth rate of 3.7% forecast from 2026 to 2029 [1]. This growth is expected to be fueled by investments in transport and renewable energy projects, as the government aims to reduce greenhouse gas emissions by 65% compared to 1990 levels by 2030 and achieve climate neutrality by 2050 [1].

To support this ambitious target, Latvia is focusing on increasing the capacity of renewable energy across the country. In September 2024, Latvenergo acquired Laflora Energy to build a 108.8MW wind farm at a former peat mining site in Livberze, with construction cost estimated at EUR185 million ($196.7 million) [1]. This project, featuring 16 wind turbines of 6.8MW each, is scheduled for completion by 2026.

In conclusion, the Latvian construction industry is on the cusp of a period of robust growth, driven by investments in various sectors and the government's commitment to reducing greenhouse gas emissions and achieving climate neutrality. With a focus on renewable energy, the industry is well-positioned to contribute to Latvia's sustainable economic development.

References:
[1] GlobeNewswire. (2025, March 6). Latvia Construction Industry Report 2025: Output to Continue on an Upward Trajectory with AAGR of 3.7% Forecast for 2026-2029. https://www.globenewswire.com/news-release/2025/03/06/3037971/0/en/Latvia-Construction-Industry-Report-2025-Output-to-Continue-on-an-Upward-Trajectory-with-AAGR-of-3-7-Forecast-for-2026-2029.html