According to Statistics Estonia, Latvia has consistently been one of Estonia's key trading partners over the years. In 2022, Latvia ranked among the top ten export markets for Estonia, often holding second or third place alongside Finland and Sweden. For example, in 2022, Estonia exported goods worth approximately 2.7 billion euros to Latvia, accounting for around 9% of Estonia's total exports. Imports from Latvia during the same period were about 2.0 billion euros, making up roughly 7% of Estonia's total imports. Although these volumes were slightly lower in previous years, the overall trend has been upward, indicating steadily growing trade ties.

For Latvia, Estonia is also a significant partner. As Estonia is Latvia’s northern neighbor and culturally-socially similar, Estonia is one of Latvia's most important export and import markets. Goods exported to Estonia include Latvian-produced food products, wood-based materials, alcoholic beverages, agricultural products, and chemical industry goods. Conversely, goods exported from Estonia to Latvia include processed wood products, machinery and equipment, IT solutions, electronics, construction materials, and various services such as financial and logistics services.

Economic Factors and Structure

Membership in the European Union has provided a strong impetus for a free trade area where there are no customs barriers or restrictions on the movement of goods and services. The geographical location of both countries is also crucial. Situated in the Baltic Sea region, they share similar market conditions, offering opportunities for the creation of joint supply chains and the development of trade routes.

A significant portion of trade structure is attributed to agriculture and the food industry. Both Estonia and Latvia are known for high-quality food production, specializing in dairy, meat, and grain production. Additionally, the share of energy and environmental technology-related goods has increased in recent years. Trade in wood and construction materials is also very active, as both countries are interested in developing their forestry and wood industries.

Analysis and Conclusions

Trade between Estonia and Latvia is stable and on an upward trend. In the near future, it is expected that the trade structure will diversify further, as both countries’ economies are moving towards higher value-added production. Growth is anticipated in IT, green technologies, and innovative industries. Cross-border investments in infrastructure, including the Rail Baltica railway project, promise to improve logistical opportunities and thereby facilitate the movement of goods.

Political and economic stability creates a favorable environment for deepening long-term economic ties. As the governments of Estonia and Latvia actively cooperate at both the Nordic-Baltic and European levels, it can be expected that trade between the neighbors will remain a cornerstone of the regional economy. Stable political conditions, shared cultural values, and similar economic structures provide a solid foundation for continued collaboration.

Figure: Dynamics of Estonia-Latvia Trade Volumes (2018–2022)

The chart shows that Estonia's exports to Latvia and imports from Latvia have steadily increased over the past five years. Exports rose from 2.0 billion euros in 2018 to 2.7 billion euros in 2022, while imports increased from 1.5 billion to 2.0 billion during the same period. This dynamic demonstrates that trade between Estonia and Latvia is becoming increasingly important over the years, supporting the economic growth and regional integration of both countries.