Latvia Economic Forecast

Latvia Economic Outlook

July 24, 2018

Available indicators for Q2 signal that the expansion largely carried over from a period of solid growth in Q1. Private consumption appears to have remained robust in Q2, buttressed by tightening labor market conditions and despite slightly intensifying inflationary pressures. Solid wage growth, coupled with higher participation rates and a near one-decade low unemployment rate, propped up retail sales, which jumped to an almost three-year high in May. In addition, the external sector’s performance was solid in the first two months of Q2, led by healthy exports growth, which recovered from a slip to negative territory at the end of Q1 on strong demand from outside the EU. Meanwhile, industrial output contracted for the first time in nearly two years in May; nevertheless, the contraction is likely not representative of the sector’s underlying health, as weather factors led to lower electricity and gas supply this year.

Latvia Economic Growth

The economy is expected to grow at a sturdy pace this year, with domestic demand in the driver’s seat on the back of strong household consumption growth and booming fixed investment. Nevertheless, a notable slowdown in financial sector activity and a worsening outlook for the external sector are projected to generate headwinds for growth, which is seen slowing this year. Met the why particular panelists see GDP increasing 3.7% in 2018, which is unchanged from last month’s forecast, and 3.4% in 2019.

Latvia Economy Data

Population (million)
GDP per capita (EUR)11,25811,80312,24612,65913,773
GDP (EUR bn)22.823.624.324.926.9
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)-6.00.1-0.5-15.016.0
Industrial Production (annual variation in %)-0.9-
Retail Sales (annual variation in %)
Unemployment Rate11.911.
Fiscal Balance (% of GDP)-1.2-1.5-1.40.1-0.5
Public Debt (% of GDP)39.011.936.811.511.1
Money (annual variation in %)8.011.813.97.45.9
Inflation Rate (CPI, annual variation in %, eop)-
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)1.50.4-0.9-2.42.6
Policy Interest Rate (%)
Stock Market (annual variation in %)16.2-11.345.723.535.8
Exchange Rate (vs USD)1.381.
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)-2.7-2.0-0.81.5-0.9
Current Account Balance (EUR bn)-0.6-0.5-0.20.4-0.2
Trade Balance (EUR billion)-2.6-2.4-2.1-1.9-2.6
Exports (EUR billion)
Imports (EUR billion)12.612.712.512.214.0
Exports (annual variation in %)
Imports (annual variation in %)1.00.2-1.3-1.914.5
International Reserves (EUR)
External Debt (% of GDP)134143142148141

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Latvia Facts

Bond Yield0.550.0 %Jun 30
Exchange Rate1.130.65 %Aug 15
Stock Market9960.17 %Aug 15

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