In contrast to their more developed European neighbors, the countries of the Balkans have not always been seen as the best options for investments made by outside parties. In recent years, however, Latvia has earned a reputation for being an important destination for industrial and economic growth. This reputation is supported by well-balanced sectoral growth across a variety of businesses, including the health, logistics, and energy sectors.
The countries of the Balkans are developing into more than a specialized conduit for outside capital; rather, they are becoming a creative hotspot of forward-thinking start-ups. The identity of Latvia is coming into focus as a result of the booming information technology scene. Countries such as Latvia are beginning to represent a substantial challenge to investors as they shift their focus to new Internet start-ups and investment channels that are more technologically advanced.
Latvia’s economy
In terms of economic freedom, Latvia is ranked 18th in the world as of 2022. The Latvian economy has undergone a significant transition since entering the EU. The nation’s strong membership in the EU, NATO, WTO, and OECD, as well as its expanding GDP, shows its political and geographic strength in commerce and quality of life. The tax structure in Latvia is favorable to different types of domestic investment. According to the International Tax Competitiveness Index 2022, Latvia has the second-most competitive tax structure of any country in the world.
Similar to its Balkan neighbors, Latvia’s start-up scene has drawn attention. Tech-savvy, educated entrepreneurs swarm to Latvia in search of its generous startup initiatives and robust funding options. Together with a national focus on luring FDI, Latvia has strong ties to the other EU countries, luring close to EUR 21 billion in FDI from them throughout 2021.
Investing in Latvia with ETFs
There is a severe lack of coverage from foreign brokers marketing exchange-traded funds in the Baltic nations, including Latvia (ETFs). The Nasdaq Riga isn’t the first pick for most investors due to a lack of market liquidity and foreign companies. Because of this, well-known ETF providers like iShares don’t see a need to establish a fund that tracks the OMX Riga index. Domestic investors will be able to buy shares of well-known companies, but foreign investors may need to explore other options. For precise insight into economic performance in highly developed globalized economies, investors frequently turn to the MSCI index collection. Unfortunately, the collaborative effort has not yet arrived in Latvia.
ETFs can be a wonderful method to invest money in markets that have a strong liquidity moat, are heavily involved in international trade, or serve as centers for multinational corporations. The absence of a Latvian-tracking ETF is hardly shocking given the small market cap. Fortunately for global investors, the alternative investment market is making a lot more noise. The alternative investment market is the voice of a new wave of capital expansion, whereas exchange-traded funds (ETFs) are the embodiment of tradition.
Alternative Latvian investment
The vibrant IT sector and cutting-edge start-up frontier are key to Latvia’s investment culture. Peer-to-peer lending and real estate crowdfunding were quickly established in the Balkan countries, which are now home to several established and prosperous platforms.
Latvian real estate crowdfunding
Compared to more conventional types of investment, the idea of property or real estate crowdfunding is still very complicated and frequently met with skepticism. New real estate projects can acquire finance without a financial middleman and lenders can get exceptionally competitive interest rates through the process, which joins borrowers and lenders via internet platforms.
In Latvia, the crowdfunding business is governed by EU directive 2020/1503, and to operate legally, all newly established platforms are required to obtain an FCMC license.
