Latvia Economic Forecast

Latvia Economic Outlook

February 26, 2019

According to preliminary GDP data, the economy finished last year on a strong footing, as growth picked up in Q4 from an already robust previous quarter outturn. Hearty domestic demand metrics suggest the domestic economy once again remained in the driver’s seat of the overall expansion. Tightening labor market conditions, stemming from rising employment and higher wages, coupled with stable inflation, appear to have propped up household consumption growth in Q4. This has more than offset a likely deterioration in the external sector, where exports decelerated again due to weaker demand from abroad. Looking ahead, available data signals braodly strong momentum in Q1 as economic sentiment in January landed above last quarter’s average.

Latvia Economic Growth

Although growth is seen losing traction this year owing to softening external demand for merchanidse goods, it should remain sturdy overall. Upbeat investment activity will be propped up by sustained inflows of EU development funds, while tightening labor market conditions should bolster private consumption growth. In the medium-term, increasing labor shortages and slow productivity growth will weigh on the expansion further. FocusEconomics panelists see GDP increasing 3.5% in 2019, unchanged from last month’s forecast, and 3.2% in 2020.

Latvia Economy Data

20132014201520162017
Population (million)2.02.02.02.02.0
GDP per capita (EUR)11,25811,80312,24612,65913,773
GDP (EUR bn)22.823.624.324.926.9
Economic Growth (GDP, annual variation in %)2.41.93.02.24.5
Consumption (annual variation in %)5.11.42.53.35.1
Investment (annual variation in %)-6.00.1-0.5-15.016.0
Industrial Production (annual variation in %)-0.9-1.13.65.48.5
Retail Sales (annual variation in %)3.83.64.92.34.3
Unemployment Rate11.910.99.99.78.7
Fiscal Balance (% of GDP)-1.2-1.5-1.40.1-0.5
Public Debt (% of GDP)39.040.936.840.540.1
Money (annual variation in %)8.011.813.97.45.9
Inflation Rate (CPI, annual variation in %, eop)-0.40.20.32.22.2
Inflation Rate (HICP, annual variation in %)0.00.70.20.12.9
Inflation (PPI, annual variation in %)1.50.4-0.9-2.42.6
Policy Interest Rate (%)0.250.050.050.00.0
Stock Market (annual variation in %)16.2-11.345.723.535.8
Exchange Rate (vs USD)1.381.211.091.051.20
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)-2.7-2.0-0.81.5-0.9
Current Account Balance (EUR bn)-0.6-0.5-0.20.4-0.2
Trade Balance (EUR billion)-2.6-2.4-2.1-1.9-2.6
Exports (EUR billion)10.010.210.410.411.4
Imports (EUR billion)12.612.712.512.214.0
Exports (annual variation in %)1.52.31.1-0.110.0
Imports (annual variation in %)1.00.2-1.3-1.914.5
International Reserves (EUR)5.82.73.23.33.9
External Debt (% of GDP)134143142148141

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Latvia Facts

ValueChangeDate
Bond Yield0.550.0 %Jun 30
Exchange Rate1.120.65 %Mar 11
Stock Market9850.17 %Mar 11

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Latvia Economic News

  • Latvia: Industrial production contracts in January

    March 5, 2019

    According to Latvia’s Central Statistical Bureau, industrial output fell 1.8% in working day-adjusted year-on-year terms in January, compared to a strong 4.5% expansion in December.

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  • Latvia:

    March 1, 2019

    According to comprehensive national accounts data released by the Statistical Institute on 1 March, economic growth reached 5.1% on an annual basis in the final quarter of 2018 (previously reported: +5.0% year-on-year), accelerating from the third quarter’s revised 4.5% expansion (previously reported: +4.8% yoy).

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  • Latvia: Inflation increases in January

    February 20, 2019

    Consumer prices rose 0.5% from the previous month in January, following December’s 0.4% dip.

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  • Latvia: Industrial production rebounds in December

    February 4, 2019

    According to Latvia’s Central Statistical Bureau, industrial output jumped 4.5% in working day-adjusted year-on-year terms in December, compared to a 0.6% contraction in November.

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  • Latvia: Growth picks up in the fourth quarter

    January 30, 2019

    According to a flash estimate released by the Statistical Institute on 30 January, the economy expanded 5.0% in year-on-year terms in the fourth quarter of 2018, up slightly from the third quarter’s sturdy 4.8% increase.

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