Latvia GDP Q1 2017


Latvia: Q1 GDP expansion faster than previously reported

May 31, 2017

In Q1, Latvia’s GDP increased 4.0% over the same period last year, according to a revised set of data released by the Statistical Institute on 31 May. The increase was revised up from the initial flash estimate that showed the economy growing 3.9%. Q1’s result marked the fastest increase since Q1 2012 and a substantial acceleration compared to the 2.6% year-on-year expansion recorded in Q4. Sequential data was also encouraging as GDP increased a seasonally-adjusted 1.6% in Q1, a multi-year high. This was also revised up from a preliminary estimate of a 1.5% increase.

Looking at the GDP components, fixed investment was the main driver behind the quarterly acceleration. Fixed investment swung from a 5.9% contraction in Q4 to an outstanding 8.8% expansion in Q1, which marked the fastest pace since Q4 2012. Likewise, private consumption growth contributed strongly to Q1’s print as it accelerated to 5.5% from 3.2% in Q4. On a less positive note, government consumption growth moderated (Q1: +3.5% year-on-year; Q4: +4.9% yoy).

On the external front, exports of goods and services increased for a fourth consecutive period, showing a solid 8.3% expansion in Q1 (Q4: +4.6% yoy). However, due to stronger domestic demand, import growth also accelerated and reached 5.3% in Q1, which came in above the 4.8% rise in Q4. The external sector contributed 1.7 percentage points to growth, which contrasted the 0.1 percentage point deduction recorded in Q4.

The Central Bank expects the economy to expand 3.3% this year. For 2018, the Bank sees economic growth rising to 3.4%. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.2% in 2017, which is up 0.2 percentage points from last month’s projection. For 2018, panelists expect the economy to expand at 3.1%.

Author:, Economist

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Latvia GDP Chart

Latvia GDP Q1 2017 2

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

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