Latvia: Economy accelerates in first quarter
September 6, 2013
According to revised data published by the statistical office on 6 September, GDP increased 4.4% in the second quarter over the same period last year. The reading was revised up from the 3.8% expansion reported in the flash estimate and represents a notable acceleration compared to the 3.6% increase observed in the first quarter. On a sequential basis, GDP rose 0.7% in seasonally-adjusted terms in Q2, which was below the 1.2% expansion in Q1.
The expansion in the second quarter reflected notable improvement across the board. Private consumption increased 6.6% in the second quarter (Q1: +6.1% year-on-year) and government spending surged 5.8% over the previous quarter (Q1: +1.1% yoy). Gross fixed capital formation declined 1.8% in Q2, which, nevertheless, represents an improvement compared to the substantial 14.4% plunge observed in Q1. Exports of goods and services grew 2.3% in Q2 (Q1: +3.4% yoy), while imports swung from a 2.0% expansion in the first quarter to a 4.2% decline in the second. Consequently, the external sector's net contribution to economic growth jumped from 0.7 percentage points in Q1 to 4.3 percentage points in Q2.
In its July Macroeconomic Developments Report, the Central Bank stated that it expects the economy to expand 4.1% this year (previous estimate: +3.6%). FocusEconomics Consensus Forecast panelists expect the economy to grow 3.4% this year, which is unchanged over the previous month's projection. For 2014, panelists see economic growth picking up to 4.0%.
Author: Ricardo Aceves, Senior Economist