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Latvia: GDP growth moderates in Q2

September 30, 2014

In the second quarter, the economy increased 2.3% over the same period last year, according to more complete GDP data released by Statistics Latvia on 30 September. The reading came in below the preliminary estimate of a 2.5% increase and followed the 2.8% expansion tallied in the first quarter.

Q2’s result reflected slower growth in domestic demand and a worse performance of the external sector. Private consumption expanded 2.3% annually in Q2 (Q1: +2.7% year-on-year) and government spending grew 4.9% (Q1: +5.2% yoy). Gross fixed investment slowed notably from Q1’s 9.3% expansion to a 1.8% increase.

On the external side of the economy, exports decelerated from the 3.4% growth in Q1 to a 1.7% increase in Q2. Imports picked up from a 0.5% expansion in the first quarter to a 2.3% rise. As a result, the net contribution from the external sector swung from plus 1.7 percentage points in the first quarter to minus 0.4 percentage points in the second.

A quarter-on-quarter comparison showed that GDP increased a seasonally-adjusted 0.9% in Q2, which came in above the 0.4% expansion tallied in Q1.

The Central Bank indicated that it expects the economy to expand 3.3% in 2014. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.0% in 2014, which is down 0.1 percentage points from last month’s projection. For 2015, panelists also expect the economy to expand 3.1%.


Author: Teresa Kersting, Economist

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Latvia GDP Q2 2014 0

Note: Year-on year changes of GDP in %.
Source: Central Statistics Bureau and FocusEconomics Consensus Forecast.


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