AGP Executive Report

Tallink Charter Deal: Tallink will charter the cruise ferry Romantika to Italy for the Mediterranean Games in Taranto, ending the ship’s Baltic summer project earlier and aiming to support financial results. Latvia Demographics: Latvia faces a “triple squeeze” as ageing and outmigration cut the population to about 1.5mn by 2050, with a sharp rise in old-age dependency and falling pension replacement rates. Fuel Retail Oversight: Latvia’s Economics Ministry says a solidarity payment mechanism for fuel retailers should be reconsidered after the Competition Council found only part of a diesel excise cut was passed through to prices. Workplace Productivity Survey: A new survey finds many Latvian workers still don’t see the workplace as an investment, even though better work environments are linked to productivity and staff retention. Latvian Expertise Abroad: Foreign Minister Baiba Braže highlights how Latvian professionals in international organisations bring political and economic benefits, with a large diaspora footprint. Hospice Care Expansion: Latvia’s first hospice day center for palliative care is being hailed as a success, boosting hopes for a wider national rollout. Property Watch: Latio has put the modernist “Villa Guna” in Jūrmala up for sale, spotlighting a high-end architectural landmark.

Relocation & Talent Pull: Estonia topped the 2026 Rumavi Global Relocation Index, scoring 72.8/100 and beating Singapore, Malaysia and Portugal—highlighting strong banking, business prospects, property rights for non-citizens, safety and digital services, with Latvia’s region watching closely. Demographics & Pensions: Latvia faces a “triple squeeze” as the population could fall to about 1.5mn by 2050, with a sharp rise in old-age dependency and a steep drop in pension replacement rates—raising old-age poverty risks and the need for private savings. Fuel Retail Oversight: Latvia’s Economics Ministry says a proposed solidarity payment mechanism for fuel retailers should be re-evaluated after the Competition Council found the diesel excise tax cut wasn’t fully passed through to prices. Energy & Infrastructure: Virši reported H1 results: net profit of EUR 4.2m, turnover up 22% to EUR 229.7m, and EBITDA up over 60%, as it expands stations and moves its biomethane plant into test production. Business & Research Funding: MikroTik again backed Latvia’s tech education, donating nearly EUR 7.8m to Riga Technical University since 2016 to strengthen labs and modern AI research capacity. Workplace Productivity: A survey finds many employees still don’t see the workplace as an investment—despite links between work environment quality, productivity and long-term loyalty.

Fuel Retail Oversight: Latvia’s Economics Ministry says a proposed solidarity payment mechanism for fuel retailers should be re-evaluated after the Competition Council found the diesel excise cut wasn’t fully passed into pump prices. Energy & Investment: Virši, Latvia’s fuel station chain, reported a strong first-half 2026: net profit of €4.2m, turnover up 22% to €229.7m, and EBITDA up over 60%, driven by station expansion and biomethane plant progress. Public Policy & Business Climate: A survey by AJ Produkti and Norstat finds many workers see the workplace as a cost, not an investment—though most link work environment quality to productivity and staying with employers. International Economic Diplomacy: Latvia’s FM Baiba Braze says Latvian professionals in global institutions are delivering both political and economic benefits, citing security priorities and diaspora reach. Research Funding: MikroTik again backed RTU, with donations since 2016 totaling almost €7.8m to build scientific infrastructure and modern lab access. Real Estate Market: Latio is marketing “Villa Guna,” a modernist seaside landmark in Jūrmala designed by Meinhard von Gerkan. Security Context: Latvia’s eastern-region risk picture remains in focus after a drone incident near Bulgaria’s Kardam raised questions about NATO’s eastern flank environment. Healthcare Services: Latvia’s first hospice day center for palliative care is being hailed as a success, with hopes for wider rollout.

Workplace & Talent: A survey by AJ Produkti and Norstat finds 69% of Latvians link workplace quality to productivity, and 68% say it boosts long-term loyalty—yet only 39% believe employers treat it as an investment. Energy Buildout: Utilitas Wind has started construction of a 117MW wind farm plus a 60MW/240MWh battery near Lode, targeting early 2028 operations and grid balancing via the Estonia–Latvia 330kV link. Retail & Fuel Results: Virši posted a 1H net profit of €4.2m on turnover up 22% to €229.7m, with EBITDA up over 60%, driven by network expansion and higher fuel and convenience-store sales. Higher Education Tech: MikroTik again backed RTU, with donations since 2016 totaling nearly €7.8m to expand research infrastructure and modern AI lab capacity. Cross-border Business: Swisscom is opening a Lisbon operations site in 2027 (about 40 staff, up to ~200), adding IT, software and finance functions alongside Riga. Property Spotlight: Latio has put “Villa Guna,” a modernist seaside landmark in Jūrmala by Meinhard von Gerkan, up for sale. Consumer Pressure: Latvia’s share of EU retail growth in June was 4.8% y/y, as spending across Europe cooled to a 1.2% rise overall.

Prison Scandal: A 21-year-old Leicestershire prison officer, Jahvine Kwamba, was jailed for eight months after sending sexually explicit messages to inmate Roberts Sokolovs, who called himself the “Latvian Pablo Escobar,” with the court hearing she initiated contact 1,367 times while he was held at HMP Fosse Way. Energy & Industry: Utilitas Wind has started construction of a 117MW onshore wind farm plus a 60MW/240MWh battery near Lode in Valmiera municipality, targeting early 2028 operations and grid balancing via the Estonia–Latvia 330kV interconnector. Business & Finance: Fuel retailer Virši posted a 4.2m euro net profit for the first half of 2026, with turnover up 22% to 229.7m euro as it expands its station network and ramps biomethane production. Tech & Research: MikroTik made another major donation to Riga Technical University, supporting lab equipment and modern research infrastructure. Public Services: Latvia’s first hospice day center for palliative care is being hailed as a success, with hopes for a wider national rollout. Aviation: airBaltic carried 558,000 passengers in July 2026, up 3% year-on-year, and flew 4,786 flights (+7.4%).

Energy Transition: Utilitas Wind is building a 117MW onshore wind farm plus a 60MW/240MWh battery near Lode, targeting early-2028 commercial operation and grid balancing via the Estonia–Latvia 330kV interconnector. Public Utilities: Riga heating bills may rise by up to 20% this autumn as Rīgas siltums submits a tariff update to the regulator, with the variable fuel-linked part to be recalculated closer to November. Renewables Pipeline: Latvia’s solar capacity has hit 1,521MW, with about 601MW added in 2026 so far, making 2026 the strongest year for solar deployment to date. Aviation & Travel: airBaltic carried 558,000 passengers in July (+3% y/y) and flew 4,786 flights (+7.4% y/y), while it also suspends the Tallinn–London Gatwick route for the winter season. Tech & Finance: Swisscom will open a new Lisbon hub in 2027 (about 40 staff, scaling to ~200), and Lithuania’s Inventi becomes the first Baltic Swift Business Connect provider; Signet Bank Group also lists the Signet Baltic Bond Fund on Nasdaq Riga. E-commerce & Taxes: Latvia collected about €5m from the EU’s new €3 customs duty on low-value parcels in July, but only around €1m reached the Latvian state budget. Security & Compliance: Latvia’s State Police say they caught a man selling modified TV consoles to access banned channels. AI Regulation: Latvia’s AI Centre adopted rules for controlled testing of two high-risk AI systems involving preschoolers and type 1 diabetes patients.

Energy & Utilities: Riga heating bills may rise by up to 20% as Riga siltums files a tariff change with the fixed part set from Oct 1, while variable costs are still to be recalculated. Transport & Infrastructure: Latvia plans to resurface 10 local gravel-road sections (50+ km) with double-layer asphalt, using state and EU Recovery Fund money to cut dust and improve durability. Renewables: Latvia’s solar capacity has hit 1,521 MW, with 601 MW added this year so far, supported by new solar parks plus wind and battery storage connections. Finance & Markets: Signet Baltic Bond Fund has been listed on Nasdaq Riga as the first open-ended UCITS fund traded on Baltic exchanges, with a portfolio focused mainly on Baltic bonds. Payments Tech: Lithuania’s Inventi becomes the first Baltic Swift Business Connect provider, letting banks access Swift via a single integration alongside SEPA/TARGET. Business & Regulation: Riga City Council’s ESCO street-lighting tender faces conflict-of-interest questions after documentation was prepared by an engineer linked to a potential bidder. Energy Security: Three Latvian pellet producers sign a memorandum to prioritize supply to the local market and set transparent pricing amid summer availability issues. AI & Data Rules: Latvia’s AI Centre adopts controlled-environment rules for two high-risk AI projects using preschool and type-1 diabetes data. Aviation: airBaltic reports July traffic growth and has suspended Tallinn–London Gatwick flights for the winter season. EU Economy (Context): Eurostat data show Latvia’s retail trade volume rose 5.8% year-on-year in June, while Bulgaria led the EU with 7.1% growth.

Baltic Security Watch: Lithuania’s defence minister Robertas Kaunas warned Russia may be weighing “false flag” provocations in the Baltics, including scenarios using intercepted or reconstructed Ukrainian-made drones against critical infrastructure, while stressing the risk of a conventional attack remains low. Ukraine Air-Defence Crunch: Kyiv says it failed to intercept any of Russia’s ballistic missiles in a major overnight strike, blaming a sharp drop in partner-supplied interceptors—Latvia’s FM Baiba Braze condemned the attack. Latvia Business & Policy: Latvia’s LIAA is tendering for a new five-year national image strategy after reviewing the “missionLatvia” framework, as the country’s investment pitch faces a changing geopolitical and tech landscape. Transport & Logistics Costs: Maersk updated its Nordic-Baltic inland fuel surcharge for Store Door shipments, with Latvia set at 12% from 5 August amid volatile fuel supply conditions. Border Operations: The Pāternieki Latvia–Belarus crossing has resumed after technical issues, reopening reservation-based travel. Defence Industry Cooperation: Latvia’s MoD signed memoranda to expand cooperation with Ukraine on unmanned systems, technology transfer and dual-use testing infrastructure. Energy Investment: Three Seas Investment Fund is backing Estonia’s Bioforce to expand biomethane capacity across Estonia, Latvia and Poland, with a fourfold production ramp planned.

NGO Funding Clash: Prime Minister Andris Kulbergs met Latvian NGOs on association and foundation financing, but groups said the discussion stayed focused on funding availability and transparency rather than solutions, with critics calling it non-constructive. Defence & Tech Cooperation: Latvia is set to expand cooperation with Ukraine’s defence industry via new memoranda on unmanned systems and dual-use testing infrastructure, while a draft decision also outlines up to 20 Latvian personnel for multinational Strait of Hormuz mine-clearance. Maritime Surveillance Contract: Airbus Helicopters’ U030 Flexrotor has started Baltic maritime surveillance work for EMSA, covering Estonia, Latvia and Finland under a €30m framework. Border Operations Resume: The Pāternieki Latvia–Belarus crossing is back in operation after technical issues, with reservations and new bookings reopened. Trade & Transport Costs: Maersk raised its Nordic inland fuel and energy surcharge for Store Door shipments, with Latvia at 12% from 5 August. Local Infrastructure Fix: Balvi municipality urgently needs about €80,000 to repair a deteriorating swimming pool cover ahead of next season. Forest Land Market Watch: Q1 2026 saw weaker activity among Latvia’s biggest forest investors, though analysts note state land deals may not fully show in official transaction stats. Sanctions Expansion: Latvia expanded its ban on imports from Belarus and Russia to additional categories including dairy, meat, feed, coffee/tea and fats/oils.

Trade & Markets: Platts’ Milling Wheat Marker slid to a 13-month low as Black Sea disruptions, weaker demand and security risks kept bids thin, with shipping calls down and prices pressured by logistics and currency swings. Shipping Costs: Maersk updated its Nordic/Baltic inland fuel surcharge for Store Door shipments from 5 August—Latvia at 12%, Estonia 18%—citing volatile fuel conditions. AI & Jobs: A World Bank report says high-income countries face the biggest AI job displacement risk, with 14.2% of jobs highly automatable versus 4.5% in lower-income economies. Latvia Policy & Borders: Latvia’s “national position” on tougher Russia/Belarus sanctions was approved, while the Pāternieki Latvia–Belarus crossing reopened after technical issues, restoring reservations and travel options. Business & Finance: SEB banka is expanding its Riga office at SATEKLES BIZNESA CENTRS, and LMT Finance received a licence to start consumer credit services. Economy Watch: Latvia’s industrial output grew 0.5% year-on-year in June, with manufacturing up but electricity and gas supply down sharply. Energy & Sustainability: Estonia’s electricity exchange price rose year-on-year amid hydropower shortages, and a new study ranks Latvia among the EU’s top circularity performers. Local Economy: Balvi urgently needs about €80,000 for swimming pool repairs to keep the facility safe for the next season.

Banking & Offices: SEB banka expanded its leased space at Riga’s SATEKLES BIZNESA CENTRS, adding nearly 550 m² and reinforcing its role as an anchor tenant in the capital’s Class A business district. Sanctions & Trade: Latvia’s cabinet approved a “national position” to step up EU work on tariffs and expanded sanctions against Russia and Belarus, citing a sharp fall in Latvia’s import value since 2022. Border Policy: The Latvia–Belarus border will not be fully closed for now; the Pāternieki crossing remains open despite earlier calls to suspend freight and resident crossings. Industry Watch: Latvia’s industrial output grew just 0.5% year-on-year in June, with manufacturing up but electricity and gas supply down sharply. Consumer Finance: LMT Finance received a licence to expand into non-bank consumer credit services. Corporate Growth: Stiga RM Group topped EUR 100m consolidated turnover for the first time in 2025, driven by investment in higher value-added production. Digitalisation Debate: A new discussion piece questions whether Latvia’s big public-sector digital spending is translating into real productivity gains. Energy Costs (Regional): Estonia’s July electricity exchange prices averaged about 20% higher than a year earlier, mainly due to lower hydropower output. Circularity: A study ranks Latvia among the world’s better performers on keeping materials in use, placing it in the top 10 overall. Real Estate & Waste: Liepāja and parts of south-west Latvia face higher household waste charges, with unsorted waste tariffs rising from August. Elections Prep: The Central Election Commission is rolling out training for municipal election commissions and polling staff ahead of the 15th Saeima elections.

Digital Public Services: Latvia ranks 4th in the EU for digitalisation of public services, with over €129m from the Recovery and Resilience Facility funding digital transformation across administration and municipalities—yet a key question remains whether productivity gains are keeping pace. Industry Watch: Latvia’s industrial production rose just 0.5% year-on-year in June, with manufacturing up 5.0% but electricity and gas supply down 29.8%, while month-on-month output fell 0.8%. Consumer Finance: LMT Finance received a licence from PTAC to start non-bank credit services, expanding LMT Group’s consumer lending offering. Waste Costs in Liepāja: Household waste tariffs are set to rise again in Liepāja and South Kurzeme, with unsorted waste charges increasing from 1 August and average household costs up about 22% in the region. Border and Trade Disruption: Latvia’s Interior Ministry is seeking to suspend operations at the Pāternieki border crossing with Belarus, which would halt road travel for residents and lorries. airBaltic Funding Talks: A bondholder meeting on airBaltic’s financial future was postponed due to insufficient quorum, with a repeat meeting scheduled for 17 August. Energy Storage Investment: The EU approved €59m in state aid for 370 MWh of battery energy storage in Slovenia, supporting grid integration of renewables.

airBaltic Financing Talks Stumble: A planned bondholder meeting on airBaltic’s financial future was postponed after too few bondholders registered, pushing a repeat meeting to Aug. 17 as interest on many bonds falls due Aug. 14. Belarus–Latvia Border Tensions: Belarus warned Latvia of “asymmetrical measures” after Latvia suspended operations at the Pāternieki border crossing, while Latvian officials say Minsk is running hybrid pressure and illegal crossings remain aggressive. Latvia–Ukraine Security Cooperation: Latvia’s foreign affairs chief met Moldova’s PM on EU and economic ties, while Latvia and Ukraine also moved forward on joint UAV and broader security cooperation. Tourism Push vs Mixed Demand: LIAA and tourism stakeholders agreed new steps to attract international visitors as Latvia’s accommodation data showed a dip in foreign guests, but domestic travel held up. Energy & Industry Signals: EU state aid cleared for Slovenia’s battery storage expansion, and Latvia-linked robotics growth was highlighted by XTEND’s rapid output across its global manufacturing network that includes Latvia. Crypto Payments Go Mainstream: Emirates announced crypto payment acceptance via Crypto.com, adding momentum to airlines experimenting with digital-asset payments.

Defense & Resilience: A new opinion piece argues Latvia and other NATO border states are building “total war” readiness, citing 2025 defense spending estimates (Latvia 3.7% of GDP, Estonia 3.4%) and stressing state capacity, not just budgets. Energy Markets: Europe’s gas buffer is under pressure as storage levels hit an 18-year seasonal low, with Latvia among the countries flagged for low inventories. AI Investment: The EU has launched a tender call for up to seven AI Gigafactories, backed by as much as €10bn public funding and aiming to unlock at least €20bn private investment, to boost Europe’s AI computing capacity. Crypto Payments: Emirates says it will accept crypto payments via Crypto.com, adding momentum to airlines experimenting with digital-asset checkout. Baltic Startup Push: A report highlights the Baltics’ startup momentum—around 33,000 startups and €607m raised in 2025—positioning Latvia and neighbors as innovation hubs. Transport & Mobility: Elron reports strong growth on Baltic routes, with the new Tallinn–Tartu–Riga link driving rising passenger numbers. Housing for Workers: Balticovo is opening a new staff rental apartment block in Iecava after investing over €2m, targeting employer-driven housing shortages. Retail Sanctions Fallout: Latvia’s MERE/Svetofor shutdown is framed by the Latvian Traders Association as government “double standards,” arguing sanctions enforcement lagged until EU-level action.

Rail & Mobility: Elron says the new direct Tallinn–Tartu–Riga rail link is lifting demand fast, with international passenger numbers rising from about 2,000 in January to nearly 4,400 in June, and over 19,000 passengers on Estonia–Latvia–Lithuania routes in H1 2026. Aviation & Security: Airbus Helicopters’ U030 Flexrotor has started maritime surveillance missions for the EU’s EMSA across Estonia, Latvia and Finland under a €30m framework contract. Startup Economy: A new look at the Baltics frames Estonia, Latvia and Lithuania as innovation hubs, citing roughly 33,000 startups, €607m raised in 2025, and 17 “unicorns” across the region. Crypto & Gaming: Stake’s first esports tournament in Stockholm saw a Latvian team (Atputies) forfeit against Team Liquid, disrupting prediction-market contracts tied to match outcomes. Business Costs & Travel: Latvia’s insurers warn that standard travel cover may not pay for organizer-cancelled events abroad, after a Pitbull concert cancellation left some travelers facing nonrefundable hotel and transport bills. Environment: Riga’s AJ Power Recycling and 3R have extended the “Give Tires a Second Life” free business tire collection drive to 14 August, with 103.6 tonnes collected in the first week.

AI Industry Push: The EU has launched a €10bn drive to build next-generation AI “Gigafactories,” aiming for at least €20bn in private investment and over €30bn total, with up to seven projects supported across two phases. Baltic Startup Boom: A new report highlights how Estonia, Latvia and Lithuania have turned into startup hubs, with about 33,000 startups and 17 “unicorns,” plus 2025 funding rising 20% to €607m. Defence Tech & Deterrence: Baltic founders are increasingly focused on drone and guidance tech to strengthen NATO’s eastern flank and improve resilience against hybrid threats. Latvia Business Confidence: Latvia’s business mood improved in July, with gains in manufacturing, retail and services, while construction stayed weak. Border & Mobility: Latvia’s Latvia-Belarus border was closed “for technical reasons,” leaving truckers stranded; Lithuania also moves to restrict Russian and Belarusian supporters from public roles and nearby real estate. Circular Economy for Firms: Riga’s 3R waste facility extended its free tire collection campaign for businesses until 14 August, after 103.6 tonnes were collected in the first week. Latvia Citizenship Rules: Latvia published four requirements for foreigners seeking citizenship, including five years’ continuous residence, Latvian language ability, and knowledge of the anthem and history. Crypto & Markets: Stake’s first esports tournament hit a forfeit involving a Latvian CS2 team, while Bybit expanded collateral options for tokenized stocks.