Flash comment: Latvia - April 29, 2016
GDP up by 1.8% YoY in 1Q 2016

  • Technically, the Latvian economy is now in recession…
  • ... but it feels only in few industries
  • We still forecast 3% growth for 2016 overall

According to the flash estimate the Latvian economy decreased by 0.1% in quarterly terms (swda) in the first quarter of 2016, which is the second consecutive quarterly fall. This means that technically Latvia is now in recession; however, it does not feel like it. 

Annual growth slowed to 1.8% (nsa) in the first quarter. Household consumption continued to increase and was the main driver of growth (e.g., retail up by 1.4%; 3.2% net of fuel sales). Investments most likely were very weak (e.g., construction down by 22%). Export and import volumes also most likely fell slightly. Yet, many manufacturers still experience volume growth of sales/exports. Despite a double digit fall in freight volumes by railway in the first quarter, value added in transport and logistics sector still grew. 

Quarterly data are being revised quite often, so we still see the Latvian economy to continue growing. We expect growth to pick up in the coming quarters as external demand strengthens and keep our forecast of 3% growth for 2016 overall.


For more information please contact Ms. Lija Strašuna, +371 67445875, lija.strasuna@swedbank.lv 

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