Latvia: Economic growth decelerates in Q2
September 7, 2012
In the second quarter, GDP increased 5.0% over the same period last year, according to revised data published by the statistical office on 7 September. The reading was revised from the previous 5.1% flash estimate and came in below the 6.9% expansion recorded in the first quarter. Despite the robust growth, the second quarter expansion represents the slowest growth rate since the first quarter of 2011. On a quarter-on-quarter basis, GDP increased a seasonally adjusted 1.3% over the previous quarter, slightly above the 1.1% increase tallied in the first quarter. The second quarter reading showed that government spending grew at a modest 0.5% pace in the second quarter, below the 1.8% expansion recorded in the first. In contrast, private consumption accelerated from a 5.4% increase in Q1 to a 7.2% expansion in Q2. Finally, gross fixed investment increased a healthy 20.5% in the April-June period, which, nonetheless, represented a sharp slowdown over the 39.0% expansion observed in the first three-month period of the year. On the external front, exports of goods and services slowed notably, growing 3.8% in the second quarter, well below the 11.5% expansion recorded in the previous period. Imports followed suit and increased 3.7% in Q2, weaker than the 10.7% expansion recorded in the first quarter. As a result, the external sector's net contribution to overall economic growth was minus 0.3 percentage points, which was slightly above the 0.5 percentage-point detraction observed in the first quarter.
Author: Ricardo Aceves, Senior Economist