According to a flash estimate by Latvia's Central Statistical Bureau, GDP growth in Latvia slowed to 1.3% in the third quarter of 2011 from 2% in the previous quarter, mainly due to slower growth in manufacturing and exports. However, a 5.7% acceleration in retail trade suggested strong household consumption, supported by increasing employment and wages. For the full year, GDP growth is still forecast at 4.2%, but recent developments in the euro zone may cause growth to slow further if weakness in major European economies persists.

1. Flash comment
Economic commentary by Economic Research Department August 9, 2011
Latvia: GDP growth slowed in 3Q 2011
GDP real growth, % According to the flash estimate by Latvian Central Statistical
Bureau, seasonally adjusted GDP increased by 1.3% QoQ in
15 the third quarter of 2011. The quarterly growth decelerated from
10 2% in the 2Q 2011, mostly because of slowing manufacturing (to
1.1%from 7.5% in 2Q) and exports. However, retail trade
5
developments (acceleration to 5.7% from 2.9%) suggested that
0
household consumption is strong. Households’ optimism is stable
-5 due increasing employment and wage incomes while deposits
-10 stock does not change.
-15
In annual terms, the economic growth picked up to 5.7% (not
-20
seasonally adjusted).
-25
1Q 07 1Q 09 1Q 11 We maintain our GDP growth forecast at 4.2% for this year.
Quarterly (sa) The impact of recent developments in euro zone on Latvian
Annual (nsa) Source: CSBL economic growth is still unclear, but we foresee that GDP growth to
slow while the growth in major European economies remains week.
Dainis Stikuts
Senior Economist
+ 371 6744 5844
dainis.stikuts@swedbank.lv
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