Flash comment: Latvia - August 9, 2012: GDP annual growth at 5.1% in the second quarter of 2012

1. Flash comment: Latvia
Economic commentary by Economic Research Department August 9, 2012
GDP annual growth at 5.1% in the second quarter of 2012
GDP real growth, %
According to the flash estimate by the Latvian Central Statistical
20 10 Bureau, seasonally adjusted GDP increased by 1% in the
Quarterly, sa (rs) second quarter of 2012 compared to the previous quarter. This
Annual, nsa implies that economic growth has retained its pace of previous two
10 5
quarters.
GDP annual growth decelerated to 5.1% from 6.9% in the first
0 0
quarter of 2012. It most likely has remained the highest growth rate
in the EU27.
-10 -5
Most likely growth in the second quarter was supported both by
exports and domestic demand. Investment growth is expected to
-20 -10
have slowed, as expansion in industry (and thus also exports) also
2007 2008 2009 2010 2011 2012
Source: CSBL is becoming more moderate. Rebound effect in retail trade (i.e.,
purchases of durable goods) starts to slowly fade away as well.
GDP and economic sentiment index Yet, both retail and industry showed decent 7% annual growth in
the second quarter. Product tax revenues were also good, up by
110 10%
9% from a year ago. Economic sentiment remained quite robust
5% also supporting growth.
100
0%
-5%
90
-10%
Outlook
-15% GDP growth is expected to decelerate quite sharply in the second
80
half of the year, owing to smaller base effects and also negative
-20%
calendar effects (smaller number of working days comparing to a
70 -25% year ago). Quarterly growth is also forecast to slow down reflecting
2008 2009 2010 2011 2012 slower developments in main trading partner-countries.
ESI, points Annual GDP growth (rs)
Source: CSBL, DG ECFIN However, taking into account strong development in the first half of
the year, economic growth in 2012 will definitely be swifter that
2.5% forecast in our April outlook.
Lija Strašuna
Senior Economist
+ 371 6744 5875
lija.strasuna@swedbank.lv
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reliable sources and methods in the preparation of the analyses reported in this publication.
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