Latvia Economic Outlook
September 1, 2020GDP contracted at the sharpest pace in over a decade in Q2, as Covid-19-related restrictions and eviscerated foreign demand dented the producing sectors while social distancing measures hammered the services sector. Household spending seemingly slumped in Q2 amid deteriorating labor market conditions and widespread closures of non-essential businesses, while fixed investment likely dived on sinking confidence and elevated uncertainty. Turning to Q3, the economic recovery seems to be underway after the State of Emergency was lifted in early June. Economic sentiment rose to a five-month high in August, while the unemployment rate stabilized in July. Moreover, retail sales rose for the second month running in July. Less positively, although the country has successfully contained the outbreak at home, the impact of the pandemic continues to weigh on exports and tourist inflows.
Latvia Economic GrowthThe economy is expected to contract markedly this year due to the Covid-19 pandemic. The external sector will reel from a collapse in tourist arrivals and hampered intra-EU trade, while plunging fixed investment and constrained private consumption are set to dampen domestic demand. Higher public spending and increased EU funding should cushion the downturn somewhat, however. FocusEconomics panelists project GDP to shrink 5.5% in 2020, which is up 1.1 percentage points from last month’s forecast. In 2021, the economy is expected to rebound and grow 4.8%.
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
September 8, 2020
Consumer prices declined 0.55% in August over the previous month, contrasting July’s 0.28% rise.
September 3, 2020
Industrial production output rose 0.1% year-on-year in July, rebounding from June’s 0.3% contraction and marking the best result in five months. July’s upturn was largely driven by faster growth of mining and quarrying production and a rebound in manufacturing output.
August 31, 2020
The economy shrank 8.9% year-on-year in the second quarter, according to detailed national accounts data released by Latvia’s Statistical Institute on 31 August.
August 13, 2020
Consumer prices increased 0.28% in July over the previous month, picking up from June's 0.18% rise.
August 3, 2020
Industrial production declined 0.3% year-on-year in June, improving notably from May’s 6.2% contraction. The improvement was broad-based.