Latvia's annual GDP growth slowed to 2.5% in the second quarter of 2014 from 2.8% in the previous quarter, according to the flash estimate by the Central Statistical Bureau (CSBL). At the same time, seasonally adjusted quarterly growth picked up to 1% (0.6% in the first quarter).
Riga
© Shutterstock nuotr.

Most likely household consumption was the main driver of economic growth in the second quarter, supported by strong wage growth and very low inflation. Meanwhile, net exports seem to have contributed negatively. Preliminary data show that the value of goods’ and services’ exports in the second quarter was by 0.3% smaller than a year ago, while imports rose by 3.5%. In the second half of the year export growth will also be challenging, as Russian economy continues to weaken and Latvian exporters face food products’ embargo by Russia. The direct effect of the latter is expected to be rather small though – banned products comprise only 0.5% of total Latvian goods’ exports. Yet, competition among food producers in Europe will increase and it will thus be more difficult to find other markets, even provided that demand in Europe will increase.

According to CSBL, construction grew by 16% in annual terms in the second quarter, retail trade by 4%, other services stayed flat, while industry still fell by 1% (since there was less heating and electricity produced due to warm winter without much snow). Given still strong construction growth, invesments most likely continued to grow in the second quarter, although imports of machinery and equipment were weak.

Outlook

Economic growth this year most likely will be below 3% that we forecast in April. The main driver of growth will remain household consumption. Major risks to Latvian growth are still related to developments in Ukraine and Russia, and further possible sanctions to/from Russia.

In mid September CSBL will also revise historical GDP series, taking into account new ESA 2010 methodology, which might change GDP growth rates and levels somewhat.

Įvertink šį straipnį
Norėdami tobulėti, suteikiame jums galimybę įvertinti skaitomą DELFI turinį.
  • 1
  • 2
  • 3
  • 4
  • 5
(0 žmonių įvertino)
0
Leave a comment
or for anonymous commenting click here
By posting, you agree to terms
Read comments Read comments

How Lithuania helped shape Sweden’s elegance

Politics is the new black, regardless of which one you choose, fictional or real. Just as many...

Rail Baltica developing efficient and sustainable energy supply system

The joint venture of the three Baltic states RB Rail AS has commenced the Study for the Development of...

Latvia's private, nongovernmental sectors to be included in national defense system

The Latvian defense ministry proposes developing a comprehensive national defense system that would...

Talks on Latvia's next gov't in new deadlock over interior minister candidate

Negotiations on Latvia's next coalition government ran into a deadlock again on Thursday as the five...

Baltic PMs meet on closer cooperation, security

The prime ministers of Lithuania, Latvia and Estonia met here on Monday on closer cooperation and...