Latvia: GDP soars at rapid pace in Q2 amid favorable base effect
July 29, 2021
GDP surged 10.3% on an annual basis in the second quarter of 2021, according to preliminary national accounts data released by Latvia’s Statistical Institute on 29 July. The result followed the 1.3% decline recorded in Q1 and marked the strongest expansion since Q3 2007—although it was largely due to a low base effect. Moreover, GDP expanded 3.7% in seasonally-adjusted quarter-on-quarter terms in Q2, contrasting the 1.5% contraction in Q1.
The second quarter’s rebound was mainly driven by expanding services-sector activity amid the easing of Covid-19 restrictions in the period, which likely bolstered consumption. Moreover, the producing sectors saw output rise robustly in the quarter, further supporting the result.
More detailed national accounts data for Q2 will be released on 31 August.
The economy is projected to rebound this year after 2020’s pandemic-induced contraction, as restrictions at home and abroad are gradually lifted. Private consumption should bolster domestic activity, while exports will likely benefit from reviving external demand. Nevertheless, recent regional tensions with neighboring Belarus and the threat of more infectious variants of the Covid-19 virus both weigh on the outlook.