Latvia: Economy remains firm in the final quarter
March 9, 2012
In the fourth quarter, GDP expanded 5.7% over the same quarter the previous year, according to revised data published by the National Statistics Institute. The print overshot the 9 February 5.0% flash estimate, but was down from the 6.6% expansion recorded in the third quarter. In the full year 2011, however, the economy soared 5.5%, marking the first year of positive growth after three consecutive years of economic contraction. Private consumption increased 4.1% in the fourth quarter (Q3: +5.4% year-on-year), while government spending grew a paltry 0.7% in the final three-month period (Q3: +2.7% yoy). On the other hand, gross fixed investment remained buoyant, accelerating from 24.4% in Q3 to 24.7% in Q4. Exports of goods and services slowed to a 9.1% expansion in the fourth quarter (Q3: +12.1% yoy), while imports increased 13.0% in Q4, weaker than Q3's 21.3% growth rate. As a result, the external sector's net contribution improved from minus 6.1 percentage points in the third quarter to minus 2.7 percentage points in the fourth. A quarter-on-quarter comparison confirms the slight deceleration suggested by the annual figures, as GDP increased a seasonally adjusted 1.1% over the previous quarter, below the 1.7% increase tallied in the third quarter. In its January Macroeconomic Developments report, the Central expects economic growth to slow to 1.3%.
Author: Ricardo Aceves, Senior Economist