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.
Author: Luis Lopez Vivas, Economist