Latvijas Bankas ekonomistes Santas Bērziņas un Ievas Opmanes prezentācija sanāksmē ar starptautisko reitinga aģentūru "Moody's Investors Service" 2022. gada 24. martā.

1. Russia/Ukraine war impact on LV economy
Santa Berzina, Ieva Opmane
Economists
Latvijas Banka
25.03.2022

2. 75
80
85
90
95
100
105
110
115
120
Q4
2019
Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4
Goods' sectors
Contact-intensive services
Other services
GDP
Health, education, public administration services
Source: Central Statistical Bureau, Latvijas Banka calculations.
GDP and value added (real; s.a.; Q4 2019 =100)
GDP with goods' sectors exceed the pre-pandemic levels, whereas
rebound in the most contact-intensive services' group still lags behind

3. 5.7
-9.1
-15
-10
-5
0
5
10
15
RU BY UA
Source: Latvijas Banka.
Exports/Imports (-) of goods and services to RU, UA,
BY (% of total)
3
Trade value with Russia is on a downtrend since 2014
Main exports and imports of goods wrt. RU, BY (mil
EUR) in 2021
-
500
1,000
1,500
2,000
2,500
Exports Imports
Food and agricultural products Base metals and products
Mineral products Wood products
Machinery and electric equipment Chemical products
Other goods

4. Selected goods with high exposure to RU/BY (%; area of the circle – significance of the
product group in total Latvian exports )
4
Exports of goods to Russia and Belarus in 2021
Beverages
Leather articles
Textiles
Mechanical and electrical
equipment
Chemical products
Precious metals and stones
Footwear, headgear
Plastic products
Paper products
-
10
20
30
40
50
60
70
- 5 10 15 20 25 30
Share
of
RU/BY
in
the
exports
of
the
product
group,
%
Share of the product group in the total exports to RU/BY, %
Source: Central Statistical Buerau of Latvia.

5. Source: Central Statistical Buerau of Latvia.
Selected goods with high RU/BY share (%; area of the circle – significance of the product
group in total Latvian imports)
5
Imports of goods from Russia and Belarus in 2021
Natural gas
Iron and steel
Electric energy
Fuel*
Bitumen
Fertilizers
Wood products
Nickel
Fats and oils
-
10
20
30
40
50
60
70
80
90
100
- 5 10 15 20 25
RU/BY
share
in
the
imports
of
the
product
group,
%
Share of the product group in total imports from RU/BY, %
*Adjusted to depict reliance of imports from other
countries on RU raw material.

6. 8.4 7.9 8.1 7.9 7.2 7.1
3.2
6.3
2.4
0
1.0
1.3
0.4
3.5
0
2
4
6
8
10
12
14
16
18
Q3 Q4 Q1 Q2 Q3 Q4
2020 2021
Unemployment rate Furlough support Wage subsidies
Source: Central Statistical Bureau Republic of Latvia, State Revenue Service, European Comission, State Employment Agency, Latvijas Banka.
Unemployment rate, furlough support, wage subsidies
(% of economically active)
7
Despite containment measures being in place unemployment
rate continued to decrease; high demand for labour force
Share of entrepreneurs indicating shortage of labour
force as factor limiting production (sa; %)
0
5
10
15
20
25
30
35
Q1
2019
Q2 Q3 Q4 Q1
2020
Q2 Q3 Q4 Q1
2021
Q2 Q3 Q4 Q1
2022
Construction Manufacturing Services
*construction 2022Q1 based on January and February

7. -16.0
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
Migration Natural population change
*2021 migration data provisionally
Source: Central Statistical Bureau of Latvia, Bank of Latvia calculations.
Migration and natural population change (per 1000
inhabitants)
8
During previous years emigration decreased, but low birth
rates and number of people to start working life
Average number of people per 1 year groups by age
groups (thsd. of people)
0 5000 10000 15000 20000 25000 30000
55–64
45–54
35–44
25–34
19-24
15-18
7–14
age 0–6
2021. migration -3000 people
2022: Ukrainian refugees?

8. ► As of March 13th: 500+ enterprises offer more
than 4.2K work places for Ukrainian refugees
► Estimated number of current refugees more than
8K, mostly women and children. Estimate that
this number will reach at least 10K.
► BUT: more than 130 enterprises already has
contacted Investment and Development Agency
of Latvia. Support is need for finding new
suppliers and new export markets. Some
enterprises may experience downturn and lay off
workers. Unemployment could increase in short
term.
Labour shortages and mismatch has still high pressure on
wages
Average wage (y-o-y; %)
Source: Central Statistical Bureau Republic of Latvia, State Employment Agency, Latvijas Banka.
9
11.8
-15
-10
-5
0
5
10
15
20
25
30
35
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total Private sector Public sector

9. Source: Central Statistical Bureau of Latvia, Eurostat, Bank of Latvia calculations.
Inflation distribution by number of products (for Latvia,
based on 163 product groups)
10
Commodity prices tend to shape short-term
developments of inflation
Inflation (%; y-o-y) and contributions to
inflation by components (pp)
-2
0
2
4
6
8
10
Services Food NEIG Energy Inflation
-25
-15
-5
5
15
25
35
2018
I
III
V
VII
IX
XI
2019
I
III
V
VII
IX
XI
2020
I
III
V
VII
IX
XI
2021
I
III
V
VII
IX
XI
2022
I
90% products
75% products
50% products
SPCI
fuel

10. ► Currently support from state
(January-April 2022): 100%
reduction in electricity network
charges and mandatory
procurement component;
Compensation for the extreme
increase in heating costs (gas and
central); Benefits for seniors and
children. Also additional support for
protected users.
► Gas price surge could increase
significantly heating and gas prices
for end users (gas price change in
July). Impact also on electricity
prices.
► Inflation is expected to be higher
than previously forecasted. Mainly
due to energy and food prices.
0
50
100
150
200
250
01.2017
07.2017
01.2018
07.2018
01.2019
07.2019
01.2020
07.2020
01.2021
07.2021
01.2022
07.2022
01.2023
07.2023
01.2024
07.2024
01.2025
TTF gas prices TTF futures (25.03.2022)
Due to war natural gas and oil prices has increased
substantially, will leave impact also on LV energy prices
Natual gas prices (MWh/euro)
Source: Refinitiv, Datastream. 11
0
20
40
60
80
100
120
140
01.2017
07.2017
01.2018
07.2018
01.2019
07.2019
01.2020
07.2020
01.2021
07.2021
01.2022
07.2022
01.2023
07.2023
Brent USD/bar
Brent futures (25.03.2022)
Brent oil prices (USD/ bbl)

11. Our country, our bank