Latvia: GDP growth slows markedly in the third quarter
GDP growth moderated to 5.1% year-on-year in the third quarter from 10.8% in the second quarter, according to detailed national accounts data. That said, the revised figure was above the advanced estimate of a 4.8% expansion.
The slowdown was broad-based, with private consumption, public spending, fixed investment and exports all moderating. Household spending increased 8.8% in the third quarter, which was below the second quarter’s 16.2% expansion. Public spending growth moderated to 4.4% in Q3 (Q2: +7.1% yoy), while fixed investment growth waned to 6.0% following the previous quarter’s 11.4% increase.
On the external front, exports of goods and services increased 5.4% on an annual basis in the third quarter, which was below the second quarter’s 15.5% expansion. Similarly, growth in imports of goods and services slowed to 13.9% in Q3 (Q2: +31.0% yoy).
On a seasonally-adjusted quarter-on-quarter basis, economic growth moderated to 0.6% in Q3, following the previous quarter’s 2.5% expansion. Q3’s reading marked the weakest result since Q2 2020.
Going forward, economic growth is expected to soften slightly in the final quarter of the year: A recent surge in new Covid-19 cases and a subsequent four-week lockdown imposed on 21 October is expected to have tempered activity. Moreover, although the lockdown has since ended, infections remain high and tighter restrictions throughout the period could still be weighing on activity.