Riga, January 16, 2026 – Moody’s affirmed Latvia’s credit rating at A3 with a stable outlook on Friday, signaling continued investor confidence in the Baltic nation despite growing geopolitical tensions. It’s a bit of a holding pattern, but in the current climate, “steady as she goes” is frequently enough a win.
Latvia’s Credit Rating Holds Steady Amidst Global Uncertainty
Moody’s decision confirms Latvia’s ability to manage its finances and adapt to economic shocks, according to Prime Minister Evika Siliņa.
- Moody’s maintains Latvia’s A3 credit rating with a stable outlook.
- The affirmation reflects solid economic foundations and a relatively high per capita income.
- Increased defence spending is not expected to substantially harm Latvia’s creditworthiness in the medium term.
“A stable outlook is very good news for our economy. This confirms that, despite increased geopolitical risks and rapid strengthening of defense capabilities, investors and international partners trust Latvia’s ability to implement a strict fiscal policy, manage debt and adapt to shocks,”
The agency cited Latvia’s “solid foundations of economic growth and a relatively high level of per capita income” as key factors supporting the current rating. However,Moody’s also acknowledged the elevated geopolitical risks facing Latvia,risks partially offset by its NATO membership and the increased presence of alliance troops within its borders.
Defense Spending Won’t Derail Creditworthiness-For Now
A important increase in defense spending is underway, impacting Latvia’s public debt relative to its gross domestic product (GDP). Despite this, Moody’s believes the increased spending won’t substantially harm Latvia’s creditworthiness in the medium term. The agency forecasts government debt will rise from 46.6% of GDP in 2024 to 49.6% in 2026, largely due to these defense investments.
Looking ahead, Moody’s projects a modest average real GDP growth rate of 1.8% for Latvia between 2025 and 2034. After a projected decline in 2023 and stagnation in 2024, the agency anticipates a GDP growth rate of 1.7% in 2025, increasing to 2.4% in 2026 and 2.2% in 2027. These forecasts, of course, are subject to external economic conditions.
Moody’s previously affirmed Latvia’s A3 credit rating with a stable outlook on July 25, 2025. similar assessments have recently been issued by other international ratings agencies,suggesting a broad consensus on Latvia’s economic prospects.
The decisions of these agencies remain significant benchmarks for investors, despite past failures – notably their slow response to the sub-prime loan crisis of 2008. Since then, ratings agencies have been striving to regain their influence and credibility.
