Latvia Economic Outlook
May 31, 2022Economic growth sped up in annual terms in Q1 2022, as less stringent Covid-19 measures led to a strong performance from the services sector. Annual retail sales averaged markedly higher in Q1 compared to Q4, while the unemployment rate dropped to its lowest level since June 2020 in March. That said, subdued activity in the producing sectors capped the overall improvement. Moreover, price pressures have continued to build up since the outset of the year—inflation hit an over 13-year high in April—due to markedly higher food prices, and are only expected to rise further in the near term. In response, Prime Minister Krišjanis Karinš replaced both the Interior and Economics Ministers, aiming for better management of the impacts of the Russian invasion of Ukraine. Nonetheless, the move has been widely criticized as untimely due to the currently spiraling energy crisis.
Latvia Economic GrowthEconomic growth is estimated to ease in 2022, in part due to a base effect, elevated inflation and severed ties with Russia—hitherto one of Latvia’s main trade partners. Nevertheless, the ending of Covid-19 restrictions from 1 April, coupled with incoming EU funds, should buttress activity ahead. A potential broadening of the war and a looming energy crisis are key risks. FocusEconomics panelists project GDP to grow 2.2% in 2022, which is down 0.3 percentage points from last month’s forecast, and 2.8% in 2023.
Latvia Economy Data
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|Bond Yield||0.55||0.0 %||Jun 30|
|Exchange Rate||1.12||0.65 %||Dec 31|
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Latvia Economic News
January 17, 2023
Harmonized inflation came in at 20.7% in December, which was down from November’s 21.7%.
January 3, 2023
Industrial output rose 4.5% year on year in November (October: -2.7% yoy).
December 8, 2022
Harmonized inflation came in at 21.7% in November, matching October’s figure.
December 6, 2022
Industrial output decreased 2.7% compared to the same month of the previous year in October, which followed September's 3.8% decrease and marked the fourth consecutive month of deterioration in the sector.
November 30, 2022
GDP contracted 0.6% year on year in the third quarter, contrasting the 2.9% expansion seen in the second quarter.