In 2011 Latvian GDP grew by 5.5% and thus Latvia was among the fastest growing economies in the European Union. Privatization is mostly complete, except for some of the large state-owned utilities. Latvia joined the European Union on May 1, 2004.

The Financial Crisis of 2008 was severily affecting the Latvian economy, primarily as a result of the easy credit bubble that began building up during 2004. The bubble burst lead to a rapidly weakening economy, resulting in a budget, wage and unemployment crisis. Latvia had the worst economic performance in 2009, with annual growth rate averaging −18%.

For centuries under Hanseatic and German influence and then during its inter-war independence, Latvia used its geographic location as an important East-West commercial and trading center. Industry served local markets, while timber, paper and agricultural products were Latvia's main exports. Conversely, the years of Russian and Soviet occupation tended to integrate Latvia's economy to serve those empires' large internal industrial needs.

Latvia ⁱ/ˈlætviə/ (Latvian: Latvija), officially the Republic of Latvia (Latvian: Latvijas Republika), is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia (border length 343 km), to the south by Lithuania (588 km), to the east by the Russian Federation (276 km), to the southeast by Belarus (141 km), and shares maritime borders to the west with Sweden. With 2,067,887 inhabitants and a territory of 64,589 km² (24,938 sq mi) it is one of the least populous and least densely populated countries of the European Union. The capital of Latvia is Riga. The official language is Latvian and the currency is called Lats (Ls). The country has a temperate seasonal climate.

The Latvians are a Baltic people, culturally related to the Lithuanians. Together with the Finno-Ugric Livs (or Livonians), the Latvians are the indigenous people of Latvia.Latvian is an Indo-European language and along with Lithuanian the only two surviving members of the Baltic branch. Indigenous minority languages are Latgalian and the nearly extinct Finno-Ugric Livonian language. In terms of geography, territory and population Latvia is the middle of three Baltic states: Estonia, Latvia and Lithuania. Latvia and Estonia share a long common history: historical Livonia, times of German (Teutonic Order), Polish-Lithuanian, Swedish, Russian, Nazi German and Soviet rule, 13th century Christianization and 16th century Protestant Reformation. Both countries are home to a large number of ethnic Russians (26.9% in Latvia and 25.5% in Estonia) of whom some are non-citizens. Latvia is historically predominantly Protestant, except for the region of Latgalia in the southeast which is historically predominantly Roman Catholic.