Latvia: Economic growth picks up momentum in Q2
September 2, 2015
According to revised data published by the National Statistics Office, GDP increased 2.7% in Q2 over the same quarter last year. The reading represented an acceleration compared to the 1.9% expansion registered in Q1 and was revised slightly up from the 2.6% rise published in a preliminary estimate. In addition, the figure marked the fastest pace of growth since Q2 2014.
Stronger domestic demand, particularly fixed investment, was the main driver behind Q2’s acceleration. Fixed investment swung from a 0.9% contraction in Q1 to a solid 2.8% expansion in Q2. Meanwhile, private consumption increased 2.4% annually in Q2, which was mildly below the 2.6% expansion observed in Q1. Government spending also increased at a more moderate pace in the second quarter (Q2: +3.3% year-on-year; Q1: +3.4% yoy).
Exports of goods and services expanded 2.0% annually in Q2, which slowed over the 3.5% increase observed in Q1. Imports expanded 0.7% in Q2, which contrasted the 1.2% contraction tallied in the previous quarter. As a result, the external sector’s net contribution to overall economic growth was less notable in Q2. It fell from 2.9 percentage points in Q1 to only 0.7 percentage points in Q2.
A quarter-on-quarter comparison confirms the acceleration suggested by the annual data. GDP, when adjusted for seasonal factors, increased 1.24% in Q2, which was faster than the 0.37% expansion registered in Q1.
Author: Ricardo Aceves, Senior Economist