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Monday 21.08.2017 | Name days: Linda, Janīna
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Economists: do we spend too much money?

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Even though the data compiled by the European Commission (EC) is regard to the mood of traders and consumers, the data of the Central Statistical Bureau of Latvia on retail trade turnover raises concern in economists of Latvian banks.

Bank of Latvia economist Igor Kasyanov:

Most likely, the increase of retail trade turnover is related to the improvement of the general mood of households about the current and future development. Confidence about economic stability usually results in the formation of small savings. And this is understandable – many households were forced to put off the purchase of some important household appliance, vehicle or general apartment repairs during the crisis.

A long-term retail trade growth is the kind that walks side by side with the dynamics of the real remuneration fund. This is why retail trade is currently on the rise. However, there will be a moment when this rise will slow down and become, once again, equal to the real remuneration increase in the national economy.

DNB Bank economic expert Peteris Strautins:

It is not just the general numbers are positive – this time, there is a general positive mood regarding the five main categories of goods. When looking at the changes in the context of the entire year, it appears that retail trade of clothing and furniture has increased by nearly 30%. Those are the things that make life more beautiful! Also, people would not increase their expenses on these products unless they would not feel confident about their future. This may not sound particularly hopeful, but clothing trade volumes have reached the levels of fat years.

Latvia is now a unique country in the EU. There are other countries with rapid export increase rates. For example, Slovakia, but is has weak consumption. There are countries with a relatively strong retail trade increase, like Estonia, but they are a weak point in the export chain.

Latvia’s economy once again rubs its hands with projections and, unlike last year, agrees with everyone. It is, however, important to keep very different growth projections for this and next year. Also, the government’s GDP increase projections are too low for 2012, but they could grow in 2013. From the point of view of budget completion it is not a big problem, because, in this case, a slower growth will begin from the highest point.

SEB Bank economist Dainis Gaspuitis:

Despite the growing concerns about the perspectives of export and economy growth, consumers’ evaluation of the future improved a bit in August, even though there is a large amount of scepticism in the assessment of current economic and economic processes. The beginning of the next heating season approaches. The increase of heating tariffs along with exceptionally cold weather could slow down the growing economic activity of Latvian consumers. Nonetheless, we still expect to see spending records during the holidays. However, a rapid spending increase, even if it does improve numbers for the general state of economy, raises questions whether we should give in to the domination of short-term expenses.

Swedbank senior economist Lija Strasuna:

A strong rise of retail trade improves consumers’ optimism. We expect the increase of average wages in Q3 have been more rapid than those in Q2. Employment increase also remained stable. It seems that residents spend their income without making savings. At the same time, most likely, the increase of income is rather segmented, and many households still cannot afford additional spending.

Ref: 102.109.109.4119


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