Latvia: First quarter GDP growth revised marginally higher
June 8, 2011
In the first quarter, GDP expanded 3.5% over the same period last year, according to revised figures published on 9 June by National Statistics Institute. The reading was revised up from the 3.4% expansion previously estimated and a notch below the 3.6% increase tallied in the fourth quarter, marking the third consecutive quarter of positive growth. A quarter-on-quarter comparison confirms the slight deceleration suggested by annual figures, as GDP expanded 0.3% in seasonally adjusted terms, which was below the 0.9% growth observed in the fourth quarter. The quarterly reading reflected a slowdown in private consumption from a 5.2% expansion in the fourth quarter to a 3.6% increase in the first quarter. In contrast, government spending bounced back in the first quarter, growing 0.6% in the first quarter after two full years of contractions. In addition, gross fixed investment posted strong growth in the first quarter (+28.4% year-on-year), after contracting in the last quarter of 2010 (-1.8% yoy). Meanwhile, the external sector deteriorated compared to the previous quarter, as imports outpaced exports. Imports of goods and services expanded 20.7% in the first quarter (Q4: +16.7% yoy) while exports grew 14.7% (Q4: +13.8% yoy). As a result, the net contribution from the external sector to overall economic growth fell from minus 1.6 percentage points in the fourth quarter to minus 3.7 percentage points in the first. At the sector level, the first quarter result reflected a deceleration in industry (Q4: +8.1% yoy; Q1: +6.5% yoy), while both agriculture and services accelerated over the previous quarter. In its April macroeconomic report, the Central Bank anticipates the economy to expand 3.3% this year.
Author: Ricardo Aceves, Senior Economist