Latvia: Economic growth moderates less than previously estimated
February 27, 2015
According to revised data published by the National Statistics Office, GDP increased 2.1% over the same quarter of the previous year. The reading represented a mild deceleration compared to the 2.4% expansion registered in the third quarter, but was revised up from the 1.9% rise registered in a preliminary estimate.
A detraction from net exports to overall economic growth was the main driver behind Q4’s slowdown. Exports of goods and services increased 2.2% year-on-year in Q4, which came in above the 0.4% rise observed in Q3. Imports swung from a 0.7% contraction in Q3 to a 2.4% expansion in Q4. As imports’ growth outpaced that of exports, the net contribution from the external sector to overall economic growth deteriorated and fell from plus 0.7 percentage points in Q3 to minus 0.1 percentage points in Q4.
Domestic demand, on the other hand, improved in Q4. Private consumption increased 2.2% in Q4, which was slightly above the 2.1% rise in Q3. Government consumption accelerated the pace from a 2.3% increase in Q3 to a 4.1% expansion in Q4. Gross fixed investment rebounded and expanded 0.4% in Q4, which contrasted the 1.7% contraction observed in Q3.
A sequential comparison showed a brighter picture for the Latvian economy than the deceleration suggested by the annual data. GDP increased a seasonally-adjusted 0.6% in Q4 over the previous quarter, which came in above the 0.5% expansion observed in Q3. Q4’s result was revised up from a previous estimate that had GDP rising 0.4%.
The economy increased 2.4% in the full year 2014, which marked a deceleration compared to the 4.2% expansion in 2013.
Author: Ricardo Aceves, Senior Economist