Riga, the largest city of the Baltic States, also stands out as the largest economy in the region. Combining its importance as a port city and the financial centre of Latvia, Riga generated a GDP of USD19 billion in 2016, making up 68% of Latvia's total. However, in terms of disposable income, Riga lags behind Vilnius (USD27,400 annual disposable income per household in 2016) and Tallinn (USD25,400), with USD21,500 in 2016.
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Riga is the single most prominent economic centre of Latvia, contributing 68% of the country's GDP as in 2016. The city's labour productivity (or GVA per employee) was nearly 75% greater than in the rest of the country in 2016. Riga's productivity dominance stems from its position as having one of the largest ports in the Baltic sea, and a high concentration of business services. 28% of total GVA was accounted for by business services in 2016, versus 16% in the rest of Latvia.
High labour productivity is reflected in higher per household incomes in the capital, at USD21,500 in 2016, which was 35% higher than in the rest of Latvia. However, Riga lags behind Vilnius (USD27,400 annual disposable income per household in 2016) and Tallinn (USD25,400) in terms of disposable income.
In 2016, average household expenditure in Riga was USD21,900 of which USD14,100 was discretionary spending (that is with housing and transport excluded). The largest discretionary budget categories in Riga are recreation/culture (9.7% of the total annual household budget in 2016), alcohol/tobacco (8.6%) and hotels/restaurants (6.0%).
Housing expenditure share in Riga stood out as the highest among the capitals of the Baltic States. In Riga, housing accounted for 24% of total household expenditure in 2016, while in Vilnius and Tallinn the share stood at 17% and 21%, respectively. However, when it comes to transport expenditure, Riga's households spend less, with transport making up 12% of total expenditure, marginally less than in Tallinn (12% of total expenditure in 2016) and Vilnius (17%) in 2016.