AGP Executive Report

Armenia–Latvia Trade: The first shipment of 5,500 Armenian roses has been exported to Latvia, with EU officials saying the move supports Armenia’s push to diversify markets after Russia tightened restrictions. EU Sanctions Response: European Commission President Ursula von der Leyen announced an EU support package for Armenia worth over €50m, plus trade-easing measures for agri-food and practical help for affected sectors like floriculture, with a planned 10,000-flower delivery to Latvia. Latvia Capital Markets: Latvia raised €1bn via a seven-year sustainable government bond sale, priced at a 3.525% yield, to fund climate and social goals. EBRD in Riga: The EBRD annual meeting and business forum is underway in Riga, focusing on Baltic competitiveness, resilience, infrastructure, digitisation and support for Ukraine. Energy & Renewables: Sunly opened a 54 MW solar park in Valmiera as part of a hybrid solar-wind-battery plan (up to €100m total), while Latvenergo plans to donate decommissioned power equipment to help rebuild Ukraine’s energy infrastructure. Local Finance Watch: Latvia’s finance ministry backed Rēzekne’s stabilization progress but said it’s not yet stable enough to end the process, while Valka’s case is also under review. EU Mobility Policy: A coalition of 11 EU states, including Latvia, is pushing for stricter visa rules for Russian tourists ahead of summer.

Latvia’s Funding Push: Latvia’s State Treasury raised €1bn via a 7-year sustainable bond issue, with a 3.525% yield, backing transport, biodiversity and social inclusion goals. Industrial Momentum: Latvia’s industrial production rose 7.0% year-on-year in April, with manufacturing turnover up 9.5% as domestic and non-domestic sales both increased. Energy & Grid Resilience: Sunly opened a 54 MW solar park near Valmiera and flagged a EUR 100m hybrid build-out, while Sunly and Rolls-Royce signed a major battery storage deal across the Baltics. EV Charging Expansion: Latvia-linked EU momentum continues as the EIB partners with Ireland to speed up nationwide public EV charging rollout. Defence & Security: France scrambled jets 11 times in a week under NATO’s Baltic Air Policing, and Latvia’s President warned security risks are rising amid Russian unpredictability. Rail Baltica Scrutiny: Latvian Radio reported complaints of bullying and aggressive management at Rail Baltica’s implementing unit, with the labour inspectorate involved. Visa Tightening: Latvia backs a push for tougher Russian tourist visa rules across 11 countries, aiming to stop “shopping weekends.” Armenia Trade Support: The EU pledged over €50m to help Armenia after Russia’s export restrictions, including a flower shipment route to Latvia.

Baltic Fintech Spotlight: At Baltic Fintech Days in Riga, Magnetiq Bank’s CEO Jakub Wieclaw and other leaders pushed the case for embedded finance, faster onboarding, and compliance that scales—while speakers debated what “real” fintech innovation looks like under MiCA and payments regulation. Aviation & Connectivity: airBaltic’s losses topped €70m in Q1, and management flagged a potential €100–150m funding need for the 2026/27 winter; separately, the airline restored a seasonal Riga–Aberdeen link twice weekly. Defence Industry Update: Latvia’s Ammunity named Kaspars Pollaks as new CEO from 1 June, aiming to boost output and strengthen end-user cooperation. Regional Security: NATO counter-drone testing in Latvia highlighted both progress and the hard reality that interceptors must work reliably every time. Local Life & Transport: Daugavpils city festival (June 5–7) brings extra public transport and free rides, with tram service paused in the centre late at night for safety. Geopolitics With Business Impact: Ukraine’s drone wave hit St Petersburg ahead of Putin’s SPIEF forum, disrupting mobile internet and briefly closing Pulkovo—underscoring how war risk is now directly shaping investment calendars.

Ukraine–Russia Escalation: Ukrainian drones hit St Petersburg’s oil and naval areas just hours before Putin’s flagship economic forum, disrupting Pulkovo Airport and prompting air-raid alerts across Latvia and Estonia. airBaltic Funding Crunch: Latvia’s transport minister says the carrier may need extra state support this summer as Q1 losses top €70m; the new government is weighing options, with a decision expected this summer and a €100m–€150m winter-season funding gap flagged. Rail Baltica Cost Pressure: RB Rail warns Latvia’s new government must urgently close Rail Baltica financing gaps; unit costs in Latvia are reported more than double Estonia’s, with redesign or timeline extension on the table. EBRD Growth Warning: The EBRD cut growth forecasts for the Baltics, citing Middle East energy shocks, weaker demand, and cost pressures—Latvia’s outlook now 2.0% for 2026. Defence Industry Moves: Ammunity, Latvia’s ammunition maker, named a new CEO (Kaspars Pollaks from 1 June). Counter-Drone Focus in Latvia: A NATO-linked drone test in Latvia highlighted both interceptor progress and the difficulty of reliable drone takedowns. Logistics & Connectivity: 4RCargo was appointed Finnair Cargo GSA for Estonia, Latvia and Lithuania, aiming to boost Baltic cargo links via Helsinki. Local Business & Services: Latvijas Pasts will buy 40 new vehicles (including electric cargo vans) for courier deliveries, while Daugavpils expands and makes public transport free during its city festival.

Latvia’s trade shift: Latvian PM Andris Kulbergs will ask the foreign minister to prepare a decision to terminate imports and exports with Russia, while allowing EU-coordinated exceptions for sectors like pharma that can’t switch markets overnight. Energy investment: Vindr opened Latvia’s first hybrid wind-and-solar style energy park in Līvāni, investing €3.4m in 6,000+ solar panels plus a battery storage system to cut reliance on imported electricity. EU finance & defence: EU Commissioner Valdis Dombrovskis told Riga’s Government Borrowers Forum that Europe should strengthen competitiveness and push for a bigger international role for the euro as volatility and security risks rise. Local business pressure: Baldone moved to shut down a quail-farm operation after residents complained about severe odours affecting homes. Cross-border expansion: Polestar entered the Baltic EV market via Volvax Baltic, with new Riga plans and access to a growing charging network. Tech & services: Latvia-based SPH Engineering launched a global marketplace to match drone survey needs with local specialist providers. Data centre build: Tet started operating the first SC7 line in Salaspils and is aiming for Tier-3 certification.

Latvian Business Growth: Prime Prometics, Latvia’s pro-age cosmetics ecommerce leader, pushed past €101m in 2025 revenue for the first time, with profit before tax nearing €15m as the team grows to around 50. Baltics FMCG Expansion: Estonia-based NML Group targets up to €3m turnover in 2026 (+40–50%) as cross-border deliveries rise and the company unifies teams across Latvia, Lithuania and Estonia. Real Estate Investment: Summus Capital bought the fully leased “The Park Krakow” office complex for €48m, adding prime tenants and extending its Poland portfolio. Infrastructure Costs Watch: RB Rail says Latvia’s Rail Baltica mainline contract is among the most expensive in the Baltics, with unit prices far higher than Estonia and Lithuania—raising the question of redesign vs renegotiation. Energy & Data Centres: Latvian operator Tet started operating the first SC7 data centre line in Salaspils ahead of schedule, aiming for Tier-3 certification. Local Economy & Risk Perception: In Latgale, drone incidents and phone warnings have not triggered a mass housing exodus yet, though entrepreneurs and investors are growing more cautious. Innovation & Skills: SPH Engineering launched a global marketplace to match drone surveying needs with local service providers, starting with 100+ partners across 38 countries. Policy & Institutions: Latvia’s state research institutes are merging into a new National Research and Innovation Institute to speed drug, diagnostics and vaccine development. Cyber Enforcement: A Latvian national was sentenced in the US to 102 months for roles in the Karakurt ransomware group, highlighting law-enforcement reach beyond borders.

Cybercrime Crackdown: A Latvian national, Deniss Zolotarjovs, was sentenced in the US to 102 months for acting as a negotiator for the Karakurt/TommyLeaks/SchoolBoys ransomware group, tied to major attacks including a government 911 system disruption. Drone & Defence Tech: Latvia and Ukraine agreed to deepen cooperation on drone technologies, energy security and economic development, including a planned bilateral drone agreement and Latvia’s donation of a thermal power unit. Energy Security & Infrastructure: Riga is pushing ahead with public transport upgrades as Tram Line 7 was extended and a new “Ķengarags” mobility hub opened, while broader security concerns keep rising around critical infrastructure and drone threats. Aviation Decarbonisation: NorSAF selected KBR’s PureSAF tech for a major SAF/e-SAF plant in Latvia, targeting 100,000 tons annually from 2030. Labour Market Watch: Latvia’s average gross monthly wage hit €1,831 in Q1, with wage growth slowing sharply to 4.2% year-on-year. EU Consumer Rules: The European Commission opened infringement procedures against Latvia and 19 other states over incomplete transposition of EU green-claims and sustainability label rules. Startup & Defence Innovation: NATO DIANA opened applications for its 2027 accelerator, with Latvia’s Deep Space Energy among highlighted participants.

airBaltic Update: Latvia’s national airline says its new business plan is essentially ready at management board level and now under review by the supervisory board, with approval possible this week but not guaranteed. Labour Market Snapshot: Latvia’s average salary was EUR 1,831 in Q1, while unemployment hit 6.5% in April, above EU and eurozone averages. Energy & Housing Costs: Riga mayor warns heat tariffs could rise as Latvenergo plans changes for TEC-1/TEC-2 supply to the city. Foreign Investment Mood: A new investor sentiment check shows Latvia’s attractiveness holding up, but only 47% of foreign investors plan to increase investment amid security and political uncertainty. Rail Baltica Funding Risk: Latvia may lose around €50m in EU funding as Rail Baltica redesign delays threaten already allocated CEF and Military Mobility money. Corruption Watch: KNAB investigations into hospital procurement have expanded, with searches at multiple facilities and cases tied to preferential treatment and possible fraud. Aviation Security & Tourism Impact: Industry groups say renewed drone/airspace threat messaging is driving booking cancellations and business losses, calling for clearer, coordinated government communication. EV Retail Expansion: Polestar confirms entry into Estonia, Latvia and Lithuania in 2026, using Volvax Baltic’s retail network and leveraging a regional charging footprint.

Energy & Costs: Riga mayor Viesturs Kleinbergs warns residents could face higher heat prices as Latvenergo plans tariff changes for TEC-1/TEC-2, while pushing for Riga to become a majority shareholder in Rīgas siltums. Security & Defence: Latvia (with the UK) is highlighted in the Drone Coalition’s delivery of 215,000+ drones to Ukraine, and a Ukrainian defence official urges Western drone command centers to be mobile and ideally underground. Regional Threat Outlook: Lithuania’s defence minister says Russia’s economy is “built on war,” raising fears the Baltics could be next. Critical Infrastructure Protection: Seventeen countries, including Latvia, launched the GUIDE framework to strengthen defence exchanges for undersea cables and other underwater infrastructure security. Latvia in the News: Estonia activated its first fixed counter-drone monitoring systems on the eastern border, signaling a broader push for drone detection across the region. Business & Markets: Latvia’s GDP growth and retail sales signals a mixed macro picture, while EU housing affordability debates keep spotlighting cost-neutral policy limits. International Finance: US DOJ moves to forfeit a luxury NYC condo tied to the 1MDB corruption case.

Baltic Security & Defence: Ukraine’s President Volodymyr Zelenskyy told CBS that Russia is preparing a “big massive attack,” warning of drones, cruise missiles and ballistic strikes, and urging Ukrainians to use bomb shelters. Drone Lessons for NATO: A Ukrainian defence official said Western drone units and command centers should be mobile and ideally buried deeper underground to reduce high-value targeting. Regional Threat Watch: Lithuania warned Russia’s war-driven economy could push the Kremlin to the Baltics next, citing airspace incursions and cyberattacks. Underwater Infrastructure Security: Malaysia, Singapore and 15 other countries launched the GUIDE framework to protect critical underwater cables and energy/telecom networks—Latvia and Lithuania included. Latvia in the Spotlight: Latvia is part of the Drone Coalition led by the UK and Latvia, which has delivered 215,000+ drones to Ukraine. Local Economy Signal: Latvia’s GDP growth slowed in Q1 while retail sales rose in April, pointing to a mixed near-term demand picture. Human Tragedy: Three Latvian climbers died and one was rescued after a fall near Denali Pass in Alaska.

Latvia in NATO’s drone push: The UK-led Drone Coalition, co-led by Latvia, has delivered more than 215,000 drones to Ukraine, including 45,000 FPVs, over 150,000 interceptor drones and 20,000 reconnaissance UAVs with up to 200 km range—funded by participating countries to scale unmanned production. Border security upgrade: Estonia has activated its first fixed counter-drone detection and monitoring systems on the eastern frontier, with full coverage planned by year-end; Latvia is also listed among countries backing the broader underwater and drone-security cooperation frameworks. Undersea infrastructure defence: Seventeen countries launched the GUIDE framework at Singapore’s Shangri-La Dialogue to protect critical underwater cables for telecoms and energy, with Latvia among the endorsers and China/US notably absent. Latvia macro snapshot: Latvia’s GDP growth slowed in Q1 to 2.5% year-on-year as public spending declined, while investment gains helped; retail sales rose in April on stronger non-food demand and fuel. EU startup momentum: The European Commission’s first Startup and Scaleup Scoreboard links pro-founder policy to better outcomes, with Estonia highlighted as a digital and early-funding leader and Latvia flagged for remaining policy gaps. Crypto regulation: Latvia’s central bank issued its fourth crypto licence, signaling continued tightening and expansion of the local digital-asset framework.

Latvia’s Economy: Latvia’s GDP grew 2.5% year-on-year in Q1 2026 as public spending cooled, while investment helped offset the slowdown; retail sales also rose in April, supported by stronger non-food demand and fuel. Startups & Policy: The EU’s first European Startup and Scaleup Scoreboard links better pro-founder rules to real performance, with Estonia highlighted for early-stage funding and Latvia noted among countries with room to improve. Aviation & Infrastructure: Riga Airport has picked international partners for a major 12-year commercial overhaul, while airBaltic repaid the first instalment of a 30m-euro state loan and continues working to stabilise liquidity. Energy & Industry: Sunly plans a €100m hybrid solar-wind energy park in northern Latvia, and NorSAF with KBR is set to build a large SAF/e-SAF facility using PureSAF tech. Business Expansion: Vilvi Group opened a new €60m cheese factory in Bauska, targeting 18,000 tons annually and exports to 40+ countries. Security & Trade Risks: Latvia’s drone and counter-drone push continues as NATO accelerates counter-UAS testing, while EU export controls keep evolving beyond traditional dual-use lists. Crime Crackdown: A Eurojust-backed Latvian-Ukrainian operation shut down a Kharkiv scam call centre that defrauded EU residents of over €100,000.

Latvia’s Economy: Latvia’s GDP grew 2.5% in Q1 2026 (0.6% quarter-on-quarter), with the biggest lift from electricity, gas, steam and air conditioning supply, plus stronger household transport spending and exports. New Government: The Saeima approved a new cabinet led by PM Andris Kulbergs, with key posts split across the coalition, including finance and justice under the United List and foreign and defence under New Unity. Aviation & Airports: airBaltic repaid the first instalment of its 30m-euro state loan (6.4m euros), while Riga Airport awarded a 12-year commercial tender: Dufry/Avolta for duty-free and food & beverage, TheMillerGroup/WHSmith for convenience retail, and Primeclass lounges via TAV Latvia. Energy & Industry: Estonian developer Sunly plans a €100m hybrid solar-wind park in northern Latvia with battery storage, and Vilvi Group opened a new €60m cheese factory in Bauska, targeting 18,000 tons annually. SAF Push: KBR’s PureSAF tech was selected by NorSAF for a Northern Europe SAF/e-SAF plant in Latvia aiming at 100,000 tons per year from 2030. Business Security: Ukrainian and Latvian police dismantled a Kharkiv call-centre scam that used fake “lost investment recovery” offers to steal over €100,000 from Latvians via online banking access and crypto laundering. Tech & Work: Eurostat data show women are a majority in science and tech employment in Latvia (62.4%), but care duties still drive a large part-time work gap. Defense & Drones: NATO and EU leaders reacted after a Russian drone hit an apartment block in Romania, as Baltic states brace for more drone and hybrid threats.

Latvia Politics & Security: Latvia’s Saeima approved a new centre-right coalition government led by Andris Kulbergs after the previous cabinet fell over stray drone incidents, with 66 deputies voting in favour; the agenda puts national security, secure elections, budget stability, and anti-cartel/anti-corruption at the top, while pledging continued support for Ukraine. EU Compliance & Consumer Rules: The European Commission opened infringement procedures against 20 EU states, including Latvia, for failing to fully transpose the Directive on Empowering Consumers for the Green Transition, targeting green-claims reliability and sustainability-label rules. Defence Industry & Drones: NATO’s new Sēlija training range near Riga is being used to test counter-drone and uncrewed systems in “battlefield-like” conditions, pushing Latvian defence firms to validate designs beyond labs. Aviation Deal: Latvia-linked lessor SmartLynx and Nigeria’s Air Peace settled a dispute over leased aircraft, with a third Airbus A320 released after months of legal tension. Energy Transition (SAF): NorSAF and KBR signed a permanent PureSAF technology license deal for a planned 100% drop-in SAF plant in Latvia’s Liepāja SEZ, with entry into service targeted for 2031.

Latvia’s New Government: The Saeima approved a new four-party coalition cabinet led by Andris Kulbergs after the previous government fell over a drone dispute, with security, budget stability, fair elections and anti-cartel/anti-corruption measures at the top of the agenda ahead of the Oct. 3 election. Border Security & Local Impact: President Edgars Rinkēvičs urged the EU to boost funding for border regions hit by drone incursions, saying air alerts are disrupting school exams and local business activity in eastern Latvia. Defence Infrastructure Build-Out: Latvia has started installing reinforced “dragon’s teeth” anti-mobility barriers along expropriated land near the Russian border as part of the Baltic Defence Line. Energy Market Watch: Estonia’s electricity has been markedly cheaper than Latvia’s in recent days, driven by successful bids on the Baltic frequency reserve market that reserve more interconnector capacity for frequency services. Aviation Decarbonisation Deal: NorSAF signed a permanent licensing agreement with KBR for PureSAF technology, targeting Europe’s largest 100% drop-in SAF/e-SAF plant in Northern Europe. Riga Airport Commercial Tender: Riga Airport selected Avolta (Dufry) for a 12-year duty-free and food & beverage concession starting Jan. 1, 2027.

Latvia’s New Government: Andris Kulbergs’ incoming coalition (AS, NA, JV, ZZS) has signed its coalition deal and activity declaration, with Saeima approval expected Thursday; the programme puts security first, promises budget discipline, pushes economic development and social policy, and targets defence spending at 5% of GDP. Drone-Driven EU Push: Latvia’s president Edgars Rinkēvičs tells Euractiv the EU should add funding for frontline regions hit by drone incursions, saying air alerts are disrupting exams and hospitality and are damaging local economies—while MFF 2028–2034 talks begin. Latvia–Netherlands Drone Deal: Latvia and the Netherlands signed a defence memorandum to expand joint drone training and testing, including Dutch access to the Sēlija range in Latvia and closer links to Ukraine’s drone production know-how. Tourism Under Pressure: In eastern Latgale, drone alerts are already hitting bookings hard, with the tourism association estimating 60% of foreign reservations cancelled and local reservations down 40% year-on-year. Pay Transparency Tech in Latvia: ERDA launched a real-time salary data platform for the EU Pay Transparency Directive, covering tens of thousands of job ads and highlighting large pay gaps across roles. Grenardi Bond Oversubscribed: AS Grenardi Group raised EUR 7m via a subordinated bond issue, with demand about 30% above target from 600+ investors across the Baltics. Crypto Regulation: Latvijas Banka issued a licence to Neverless SIA for crypto-asset services. Border Security: Latvia is strengthening anti-drone defences along its Russia/Belarus border in response to recent incursions.