Latviski English По-русски
Ceturtdiena 20.06.2019 | Name days: Rasa, Rasma, Maira

Economists predict hard times for Latvia’s manufacturing industry

(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUNo growth is expected in Latvia’s manufacturing industry in the near future, economists from Swedbank, Luminor and Citadele Bank predict. In spite of global trends the decline in Latvia is not as major as previously expected.

Nevertheless, economists are confident – a decline in unavoidable.

«The situation in Latvia’s manufacturing industry is rather complicated. It’s not yet a crisis but it is definitely a period full of challenges,» comments Luminor economist Pēteris Strautiņš.

Driving force

Because April’s «growth factors» included manufacture of hardware, electrical equipment, computers, electronic and optical equipment and food, as well as repair and installation of equipment and hardware, Swedbank economist Linda Vildava predicts they will ensure longevity of growth, because they are some of the largest industrial production sectors. She also notes that growth has been observed in food production after several months of decline.

Citadele Bank’s economist Mārtiņš Āboliņš says repair and installation of equipment and hardware represent an important industry, which is why in the coming months there could be a decline there.

Strautiņš says manufacture of electronic hardware has grown the most rapidly in Latvia. Growth was secured by companies of foreign investors, such as Lexel fabrika and other well-known players.

«The entire post-Soviet era was as though American roller-coaster for 19th century-founded industrial giant RER, whose turnover in Q1 has more than doubled. It may even become the industry’s leader this year. Production of optic fibre continues rapidly developing, making Līvāni Latgale’s city with the most powerful export industry growth in the past five years,» comments Luminor expert. He predicts decline will continue in food production and wood processing.


«Sustained growth is especially topical in a time when the largest sub-industry – wood product manufacture – has experienced manufacture volume decline in the first month after a long period of time. This was but one month, so it is too soon to make any pessimistic conclusions. It is possible, however, that this outlines poor contribution previously mentioned by wood-working industry workers’ survey,» comments Vildava.

Āboliņš notes that output of wood-working industry has declined due to price corrections for lumber. He predicts some drops are expected for the industry in the rest of the year.

However, economists allow that lower prices will improve the situation with manufacture of furniture, because raw materials will likely become more accessible.

Strautiņš calms – there are other rapidly growing industrial sectors.

«Looking at economic growth based on paid wages, non-metallic mineral manufacturers are among the leaders together with paper and printed materials manufacturers. Over the course of five years wages of Latvian residents have grown by approximately two-thirds,» the expert notes.

«As industrial structure becomes more varied and the role of processing of natural resources reduces, we will become less dependent on weather conditions and global disasters with local effect. Currently we have to keep in mind that this future is gradually approaching,» comments Luminor experts.

Breath of the world

Vildava says that industrial output this year seems surprisingly good in spite of less than positive background.

«Processing industry’s growth in Europe is gradually becoming slower. Procurement managers’ index in Eurozone’s processing industry (this index is used to observe industry development trends before release of data) points to continued weakness in the region in the second quarter, with new orders and production volumes declining,» comments Vildava, adding that the uncertainty with Brexit and trade wars do not paint a pretty picture.

Āboliņš does not believe the situation could improve in the near future.

He says signals pointing towards construction industry’s slowing in Germany and Sweden could affect Latvia more heavily than the current slowing in the global economy.

«In Latvia, this industry’s growth has become more rapid at the beginning of the year, and the general mood of businessmen, although showing signs of decline, remains above average. Nevertheless, the longer the external environment remains in a bad spot, the more of a challenge it will provide Latvia’s industrial workers to maintain and increase production output,» predicts Swedbank economist.

Leave a reply

  1. Justs says:

    The E.U. is grinding Latvia into the dustbin of history. Your young people have all left and the country is nothing but a retirement home for drunken old people that are dying at age 58.

Researchers: Eastern Latvian cities promote Russia’s influence in Latvia

Despite Latvia’s difficult relations with Russia, two major Latvian cities engage in initiatives adhering to the interests of the eastern neighbour, researchers of the Centre for East European Policy Studies have found in a new, revealing study.

Experts on Latvia’s compensations to Jewish community: Good idea poorly developed

The Latvian draft law on paying compensations to the Latvian Jewish community for the real estate confiscated by Nazi and Communist occupation powers embodies a good idea, yet the requested sum and articles of law lack clear substantiation, legal experts commented to BNN.

Hollywood filmmaking in Tallinn? Estonia considering EUR 5 million support

The Estonian government is reviewing a request from film director Christopher Nolan, renown for Hollywood thriller blockbusters, to support with five million euros a film currently shot in Tallinn. Estonian state movie budget for 2018 is two million euros.

Annual inflation in Latvia, Estonia among EU's highest

Data on the annual inflation rate in the European Union showed that price rise in Latvia was 3.5%, followed by Estonia with 3.1%, Eurostat reports.

Nausėda’s pick for doctor seen as éminence grise of Lithuanian health care

Lithuanian President-elect Gitanas Nausėda has chosen Remigijus Žaliūnas as his personal doctor. The pick is seen as controversial by LRT broadcaster over Žaliūnas’ contacts with both business heavyweights and policy makers.

Latvian Prime Minister not to bend to budget appetite of extra EUR 600 million

For the Latvian state budget of 2020, the ministries have submitted requests exceeding the spending plans by 600 million euros, said Latvian Prime Minister Krišjānis Kariņš to Rīta Panorāma TV programme. The PM also expressed determination not to raise taxes.

Availability of cancer diagnostics in Latvia worsening critically, surgeon warns

The availability of cancer diagnostics and chemotherapy in Latvia is worsening critically, warned the head of the Oncology Clinic of the Riga Eastern University Hospital, surgeon Armands Sīviņš.

Take two: Trump starts re-election campaign for U.S. President

U.S. President Donald Trump has officially opened his bid to be re-elected to the post in the 2020 election. The new campaign slogan is: «Keep America great». There are 39 other candidates competing in the race to White House.

Ban on anonymous comments suggested after Baltic Pride in Vilnius

To stem offensive comments on Lithuanian internet media, member of the Seimas Vytautas Kernagis has suggested banning such anonymous expression of opinion, yet European case law upholds the right of authorless speech online, LRT reports.

Plaster to education: Latvian teachers’ pay increased for 2019 alone

The Latvian government has approved the rise of the lowest pay rate of teachers, but funds for this purpose have been earmarked only for the second half of 2019.

Pay cut to major Latvian port board members approved by government

The salary of the board members of major Latvian ports has been cut by a quarter in a decision by the Latvian Cabinet of Ministers.

Nordea bank searched in Denmark over money laundering allegations

The Danish offices of the Scandinavian Nordea Bank have been searched by police as a probe in alleged money laundering is being conducted, Bloomberg reports.

Fire Service: Violations in new Ventspils music school prevented

In the newly-built Ventspils Musical High School and concert hall Latvija, which had problems with fire safety, the Latvian State and Fire Rescue Service has found in a repeated inspection that the violations have been fixed.

UN: 2.2 billion people globally still lack safe drinking water

A report by the United Nations Children’s Fund and the World Health Organisation has found in study that 1 in 3 people or 2.2 billion people around the world lack safely-managed drinking water, while 673 million people practice open defecation.

Key owner of pharmaceutical giant Olainfarm changes board member over distrust

In Olmafarm, the largest owner of the Latvian pharmaceutical giant Olainfarm, changes in the management board have taken place over no-confidence, according to a decision of the majority of the co-heirs of Olmafarm seen by LETA news agency.

Lithuanian experts: No way of stopping coming nuclear power plant of Belarus

Options that could stop the building of a nuclear power plant in Belarus have been exhausted, experts in neighbouring Lithuania have said to its public media.

Latvia pushing for joint stance of Baltic-Nordic MPs on security policy

Ahead of the Parliamentary Assembly of the Organisation of Security and Cooperation in Europe, it is key for the legislators of the eight Baltic-Nordic states to have a common position on security policy, said MP Inese Ikstena, head of the Latvian delegation.

Latvian coalition undertakes to rise teacher salaries over reform

Recognising that education reforms in Latvia have been initiated, the ruling coalition has pledged to pass the decision to allocate funds to rising teacher salaries, as indicated by Latvian Prime Minister Krišjānis Kariņš. Kariņš stated that the coalition parties have established that «reforms envisaged by Minister of Education Ilga Šupilinska have been initiated».

Latvian Enterprise Register: Companies not revealing true beneficiaries to be wound up

Once changes to the Latvian Law on the Prevention of Money Laundering and Terrorism Financing are signed by State President, the Enterprise Register will be tasked with winding up legal entities not revealing their true beneficiaries.

Latvian PM: If Estonia breaks deal on alcohol excise, we’re forced to respond

If Estonia has broken a deal with Latvia on alcohol excise tax, then Latvia is left to no choice, but to respond with a corresponding cut in excise, said Latvian Prime Minister Krišjānis Kariņš.

Never too late to marry – elderly marriages jump in Latvia

Over the year 2018 in Latvia, the total number of marriages fell by 0.7 %, the number of marriages concluded by elderly population grew 1.7 times, data from the Central Statistical Bureau of Latvia showed.

Eesti Energia suggests introducing customs tax to cheap Russian power

Estonian state energy firm Eesti Energia has proposed introducing a customs tax to electricity imported by Estonia, Latvia and Lithuania from Russia.

Social care centre in Latvia blamed for severe human rights violations

Latvian Ombudsman’s Office has found severe human rights violations in the social care centre Ezerkrasti and accused the institution of not complying with recommendations to it. Ezerkrasti is a branch of the state social care centre Riga, located outside the Latvian capital.

Unmarried couples’ law to be proposed in Latvia

In the Latvian Saeima, this week, a draft Law on Unmarried couples would be proposed by the party alliance Attīstībai/Par!.

Glass fibre maker Valmieras stikla šķiedra files for legal protection

Latvia-based glass fibre maker AS Valmieras stikla šķiedra has on Monday, June 17, announced filing for the start of legal protection proceedings aimed at ensuring sustainable continuation of group level operations.