During the last 20 years the development of economic situation in Latvia has gone through various stages. These stages include Post-Soviet re-structuring of demand and closing of industrial giants; development of the economy based on transit; development of craft manufacture, establishment of small enterprises and development of the services sector (after joining the EU), and their decline because of transition to the system focused on export of labour resources. In 2009 the next stage of economic development started. Latvia does not posses sufficient resources for survival, financing has been requested from the international community. Unfortunately, any of the mentioned models is not a necessity for the developed countries; therefore it is possible to draw a conclusion that the Latvian economy still is in the process of transformation. It is necessary to define possible directions of the further development. In order to estimate economy development in Latvia, the model of systems dynamics that quantitatively analyzes macroeconomic balance is developed. Considering the topicality of the theme, the purpose of the article is to reflect the developed model. To achieve the purpose the following problems are put forward: • to reflect the model structure, to show its forming blocks; • to validate economic interrelations and assumptions which are accepted in the model; • to show model application considering an example of separate economic indicators. The model presented in the article has been developed with the use of a method of systems dynamics. The method has been chosen taking into account difficult interaction between macroeconomic processes. It is a unique quantitative method, which allows estimating not only plural causally - investigatory communications, but also their feedback. In this connection macroeconomic balance is based on feedback for its analysis in the long-term period, it is recommended to use a method of systems dynamics.