Latvia: Economy accelerates in Q3
December 9, 2013
According to revised data published by the statistical office on 9 December, GDP increased 4.5% in the third quarter over the same period last year. The reading was revised up from the 4.2% expansion reported in the flash estimate and represents an acceleration compared to the 4.3% increase observed in the second quarter. On a sequential basis, GDP increased 1.3% in seasonally-adjusted terms in Q3, which was well above the 0.1% expansion recorded in Q2. The acceleration in Q3 reflected an improvement in domestic demand. Gross fixed investment increased 3.0%, which was faster than the 1.1% expansion recorded in the second quarter. Meanwhile, the result for total consumption was due to softer growth in both private consumption (Q2: +6.5% year-on-year; Q3: +4.9% yoy) and government consumption (Q2: +5.8% yoy; Q3: 1.4% yoy). On the external front, exports of goods and services fell 1.3% in Q3 (Q2: +2.4% yoy). Imports decreased 1.4% in the third quarter, which was less sharp than the 4.2% decline recorded in the second quarter. The external sector's net contribution to economic growth fell from 4.0 percentage points in Q2 to 0.1 percentage points in Q3. In its October Macroeconomic Developments Report, the Central Bank stated that it expects the economy to expand 4.1% this year. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.4% this year, which is unchanged over the previous month's projection. For 2014, panelists see economic growth picking up to 4.0%, which is down 0.1 percentage points from last month's Consensus.
Author: Ricardo Aceves, Senior Economist