- Latvia's GDP grew 6.9% annually in Q1 2012, up slightly from the previous quarter's growth rate of 1%. This exceeded the initial estimate of 6.8% growth. - Investments and exports increased substantially, driving overall growth, while household consumption and government spending also increased. - The construction industry saw the strongest growth of 28.5%, followed by manufacturing at 16.5%, as public infrastructure and private facility investments increased. - While Latvian growth is expected to slow due to weakening European economic activity, the better than expected Q1 GDP may lead analysts to revise the country's full-year growth forecast upward from the current estimate of 2.5%.

1. Flash comment: Latvia
Economic commentary by Economic Research Department June 8, 2012
Latvian annual GDP growth was 6.9% in 1Q 2012
Real GDP growth, %
Latvia’s GDP data for the first quarter of 2012 were revised
10 5 upwards by 0.1 percentage point. According to the Latvian Central
Quarterly, sa (rs)
Statistical Bureau, seasonally adjusted GDP quarterly growth
Annual, nsa
slightly accelerated to 1.1% in the first quarter of 2012 from 1% in
0 0 the fourth quarter of last year.
In annual terms economic growth was 6.9% in the first quarter (the
flash estimate showed 6.8%). Investments (incl. inventories) were
-10 -5
by 15.6% higher than a year ago (39% excl. inventories), exports
were up by 9.9%, household consumption by 5.4%, and
government’s consumption at 1.8%. Higher domestic demand and
-20 -10 stronger exports boosted also imports that grew by 9.5%.
2008 2009 2010 2011 2012
Source: CSBL The strongest growth among industries in the first quarter was in
construction (28.5%), mostly driven by public investments into
Contribution to GDP growth, pp infrastructure and, to a lesser extent, by private investments into
20 production facilities. It was followed by manufacturing growth
(16.5%), as well accommodation and food services (11.8%).
10
0
-10
Outlook
-20
Latvian economic growth is to slow in the coming quarters due to
-30
the weakening economic activity in Europe. But given the better
-40 than expected GDP growth in the first quarter, we will most likely
2008 2009 2010 2011 2012 revise upwards our current GDP growth forecast for this year of
Households Government
Gross fixed cap.form. Inventories 2.5%.
Net exports GDP growth
Source: CSBL
Economic sentiment and GDP growth
120 20% Dainis Stikuts
15% Senior Economist
110 10% + 371 6 744 5844
5% dainis.stikuts@swedbank.lv
100
0%
-5%
90
-10%
80 -15%
-20%
70 -25%
2008 2009 2010 2011 2012
ESI, points Annual GDP growth (rs)
Source: CSBL, DG ECFIN
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reliable sources and methods in the preparation of the analyses reported in this publication.
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