Latvia's economy grew by 0.3% in the first three months of 2010 compared with the previous quarter, preliminary government figures have shown.
The data suggests that the country, which was the EU nation worst hit by the global financial crisis, had inched out of recession.
It is the first time Latvia's economy has grown since mid-2007.
But analysts say that given its economy shrank by 18% in 2009, the country faces huge struggles.
Latvia enjoyed some boom years as foreign loans poured into the country, and property prices soared.
Rising wages and a sense of wealth from rising property prices fuelled a consumer spending boom.
But in 2008, the property bubble burst and foreign lending dried up.
In the wake of the crash, more than one in five adults in Latvia is unemployed and among young people the rate is more than two in five.
Many Latvians have responded by going abroad to find work. The number of Latvians arriving in the UK to work is estimated to have doubled last year.