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Latvia’s GDP experiences the weakest growth among Baltic States

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIn Q3 2016, as compared to Q2, gross domestic product (GDP) at constant prices increased by 0.2 %, according to seasonally and calendar adjusted data.

In Q3, as compared to the corresponding period of 2015, GDP grew by 0.3 % according to both – seasonally and calendar adjusted data, as well as non-adjusted data. After receiving and analysing the detailed data of all sectors regarding Q3, it has been established that the volume of GDP growth has been lower than estimated a month before, according to the latest data from the Central Statistical Bureau of Latvia.

In Q3, GDP at current prices amounted to EUR 6.4 billion, whereas at constant prices of 2010 – to EUR 5.6 billion.

In Q3 2016, as compared to Q3 2015, the manufacturing sector grew by 4 %. Growth was recorded in all of the largest manufacturing sub-sectors: in manufacture of wood and of products of wood – of 4 %, in manufacture of food products – of 1 %, as well as in manufacture of fabricated metal products – of 6 %.  Significant growth was also observed in manufacture of computer, electronic and optical products – of 22 %, in manufacture of machinery and equipment n.e.c. – of 13 %, and in manufacture of other non-metallic mineral products – of 10 %. However, there was also a drop recorded in the industrial production of certain sub-sectors: in manufacture of wearing apparel – of 5 %, in manufacture of chemicals and chemical products – of 8 %, as well as in repair and installation of machinery and equipment – of 11 %.

In Q3 2016, as compared to the corresponding quarter of the previous year, the construction production volume decreased by 22 %. Construction volume dropped by 3 % in the segment of non-residential buildings (a share of 39 % of the total construction production volume) and by 9 % in the construction of residential buildings (a share of 16 %). The largest drop (of 36 %) was recorded in the construction of civil engineering structures (a share of 45 % of the total construction production volume), including the construction of harbours, waterways, dams and other water works – of 39 %, and the construction of highways, streets and roads, airfield runways, and railways – of 31 %. In turn, growth was recorded in the construction of bridges and tunnels – of 50 %.

Retail trade witnessed overall growth of 1 % in Q3 2016, of which retail trade in food products decreased by 2 %, whereas retail trade in non-food products increased by 3 %. Wholesale increased by 6 % during the respective period, while wholesale, retail trade and repair of motor vehicles and motorcycles indicated a drop of 3 %.

In Q3 2016, as compared to Q3 2015, the transportation and storage sector witnessed a drop of 2 %. Passenger traffic increased by 5 %, freight traffic dropped by 7 %, warehousing and support activities for transportation witnessed a drop of 3 %, while growth of 13 % was recorded in postal and courier activities.

Significant growth (of 11 %) was recorded in accommodation and food service activities, of which 14 % in accommodation services and 9 % in food services.

GDP growth was facilitated by taxes on products, which grew by 4 % in Q3 2016 in comparison to the corresponding period of the previous year.

In Q3 2016, final consumption expenditure rose by 3 %. That was influenced by a 3.2 % increase in private final consumption, where household expenditure on transport (expenditure on public transport, purchase and exploitation of transport vehicles) grew by 2 %, on recreation and culture – by 5 %, while expenditures on restaurants and hotels grew by 9 %. Expenditure on food has remained at the level of the previous year, while expenditure on housing decreased by 3 %. Final consumption of households was affected by the drop in consumer prices on transport and housing, household equipment and routine household maintenance, as well as the increase in the income of households. Government final consumption grew by 2 %.

Gross fixed capital formation witnessed a rapid decrease for the third quarter in a row, dropping by 26 % in Q3 2016, as compared to the corresponding period of 2015. A drop was recorded in all of the fixed capital groups: investment in equipment and machinery decreased by 12 %, in intellectual property – by 30 %, whereas in dwellings and other buildings and structures – by 39 %. The largest investments made in Q3 where recorded in the sector of public administration and defence, compulsory social security (22 % of the total investments), retaining the level of investments of the previous year within the sector. 13 % of the total investments were made in the transportation and storage sector, which was still 59 % less than the year before. Investments in the electricity, gas, steam and air conditioning supply sector decreased by 4 %. Growth in investments was recorded in the sectors of trade (5 %) and health and social work (3 %).

Exports of goods and services have grown by 2 % in Q3, whereas imports have increased by 1 %. Although it has to be noted that the respective increase was witnessed due to a drop in prices. The growth in exports had a positive impact on the GDP in the amount of 1.4 percentage points, whereas imports decreased the total GDP by 0.4 percentage points.

According to the flash estimate data of Estonia and Lithuania for Q3, the GDP of Lithuania has grown by 1.7 %, while the GDP of Estonia has increased by 1.1 %.

Ref: 102.109.109.6097


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