Latvia GDP Q1 2021

Latvia

Latvia: Contraction in GDP softens again in Q1

May 31, 2021

The economy shrank 1.3% year-on-year in the first quarter of 2021, according to detailed national accounts data released on 31 May. The reading showed a slight improvement from the 1.5% contraction logged in Q4 2020, and was also above the 2.2% downturn reported in the preliminary Q1 release. That said, the result still marked the fifth consecutive quarter of declining output.

Q1’s softer downturn was chiefly due to a milder decline in consumer spending (Q1: -7.3% yoy; Q4: -8.5%). On the other hand, the result was weighed on by deteriorating capital and public spending: Fixed investment fell 4.5% in Q1, contrasting the previous quarter’s 2.6% rise, while government consumption growth slowed slightly to 2.9% in the first quarter (Q4: +3.0% yoy).

Externally, exports of goods and services fell 1.0% year-on-year in Q1, swinging from the 3.0% increase logged in the previous quarter. Meanwhile, imports grew 0.3% annually, moderating from Q4’s 1.8% rise.

On a seasonally-adjusted quarter-on-quarter basis, GDP fell 1.7% in Q1 (Q4: +1.1% yoy).

GDP is set to recover from the pandemic’s impact this year, as demand revives both abroad and at home. That said, still-high Covid-19 infections and a relatively lagging vaccination campaign, coupled with concerns regarding the strength of the recovery in the Eurozone, cloud the outlook.

FocusEconomics panelists see GDP growth of 3.6% in 2021, which is unchanged from last month’s estimate. In 2022, the economy is seen expanding 4.8%.


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Latvia GDP Q1  2021 1

Note: Year-on year changes of GDP in %.
Source: Central Statistics Bureau and FocusEconomics Consensus Forecast.


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