Latvia: Economic activity gains momentum in Q3
December 7, 2012
In the third quarter, GDP grew 5.2% over the same period a year before, according to revised data published by the statistical office on 7 December. The quarterly figure was revised down from the 5.3% increase estimated on 9 November, but still came in above the 5.0% expansion registered in the second quarter. On a quarter-on-quarter basis, GDP increased a seasonally adjusted 1.7% in Q3, faster than the 1.3% expansion observed in Q2.
The acceleration particularly reflected an improvement in the external sector. Exports of goods and services accelerated from a 3.8% increase in the second quarter to a 7.0% expansion in the third. In contrast, imports swung from a 3.7% increase in Q2 to a 1.3% contraction in Q3. As a result, the external sector's net contribution to overall economic growth bounced back from minus 0.3 percentage points in the second quarter to plus 4.8 percentage points in the three-month period up to September.
Meanwhile, domestic demand moderated somewhat over the previous quarter. Total consumption continued to grow, albeit at a slower pace, as private consumption increased 5.1% in Q3 (Q2: + 7.2% year-on-year), while government spending contracted 2.8% in the third quarter (Q2: +0.5% yoy). Meanwhile, gross fixed investment decelerated sharply from a 20.5% increase in Q2 to a 2.0% expansion in Q3, the slowest pace recorded since the fourth quarter 2010.
Author: Ricardo Aceves, Senior Economist