Latvia: Economy decelerates in first quarter
June 7, 2013
In the first quarter, GDP increased 3.6% over the same period last year, according to revised data published by the statistical office on 7 June. The reading was revised from the initial 3.1% increase reported in the flash estimate but marked a deceleration compared to the 5.1% expansion registered in the final quarter of 2012.
The quarterly print showed that total consumption accelerated from a 3.3% increase in the fourth quarter to a 4.1% expansion in the first, as growth in both private and government consumption picked up compared to the previous period. On the other hand, gross fixed investment swung from a 4.2% increase in Q4 to a 10.6% plunge in Q1, which represents the worst result since Q2 2010.
On the external front, exports of goods and services decelerated sharply and increased 2.9% in the first three months of the year (Q4 2012: +8.5% year-on-year). Meanwhile, Imports followed suit and slowed down from 1.3% in Q4 to 1.0% in Q1. As a result, the external sector's net contribution to overall economic growth deteriorated from 4.1 percentage points in Q4 to 1.1 percentage points in Q1.
On a sequential basis, GDP rose 1.4% in seasonally adjusted terms in Q1, which mirrored an expansion of the same magnitude in Q4.
In its April Macroeconomic Developments Report, the Central Bank maintained their growth projections and expects the economy to expand 3.6% this year. FocusEconomics Consensus Forecast panellists expect the economy to grow 3.4% this year, which is unchanged over the previous month's projection. For 2014, panellists see economic growth picking up to 4.0%.
Author: Ricardo Aceves, Senior Economist