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Friday 28.10.2016 | Name days: Ninona, Ņina, Antoņina, Oksana

Current account deficit in Latvia reaches 23.5 million euros

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn Q1 2015, current account deficit in Latvia was EUR 23.5 million, which is 0.4% of GDP. The improvement over the previous quarter was mostly due to the reduction of deficit following the inflow of money from European Funds.

Foreign trade deficit was EUR 524.4 million in Q1 (EUR 541.4 million in Q4 2014). Its decline was mostly due to a more rapid decline of imports than exports. A comparison of data from two previous quarters shows that foreign trade deficit was 9.5% of GDP in Q1 2015. That of the previous period was 8.4% of GDP. Larger deficit can be explained with slower GDP growth at the beginning of the year. Positive balance of services (EUR 418.0 million) had reduced by EUR 32.6 million in Q1 2015 in comparison with the previous period. The decline was mostly due to a decrease of construction services abroad and decrease in the amount of money spent by foreign travellers in Latvia, which may be due to the factor of seasonality. Compared to the previous quarter, the balance of transport services had improved slightly in Q1 2015, which is mostly thanks to marine transport and railway cargo transport, notes Bank of Latvia Economist Linda Vecgaile.

The balance of initial revenue became positive and reached EUR 105.5 million or 1.9% of GDP in Q1 2015, which is mostly due to the inflow of money from EU funds.

The balance of secondary revenue became negative in Q1 2015. It reached EUR 22.6 million or 0.4% of GDP. Realization of finances provided by EU funds continued in Q1 2015. As a result, the capital account’s positive balance reached EUR 183.7 million or 3.3% of GDP (EUR 133 million or 2.1% of GDP in Q4 2014).

Financial account balance became positive and reached EUR 27.8 million or 0.5% of GDP in Q1 2015. During this period, a total of EUR 215.7 million of direct investments flowed into Latvia. The European Central Bank launched its extended asset purchase program this year. As part of this programme, Latvia procured bonds worth EUR 190.3 million. The programme launched by ECB could indirectly stimulate economies of Eurozone member states, which could help increase Latvia’s exports to those countries, comments the economist.


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