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Latvian GDP Q1 2020Photo: CSB

Latvian GDP contracted by 1.5% in first quarter

Data compiled by the Central Statistical Bureau (CSB) show that in the first quarter of 2020, compared to the first quarter of 2019, gross domestic product (GDP) decreased by 1.5 % (according to seasonally and calendar non-adjusted data).

In the 1st quarter GDP at constant prices was EUR 6.8 billion.

Cared to the previous quarter, GDP fell by 2.9 % as the first economic effects of the coronavirus mae themselves felt. 

Manufacturing volume decreased by 1.2 % compared to a year earlier. In the largest manufacturing sector – timber production – a fall of 1.9 % was observed. However, construction production rose by 14.9 %. 

Compared to the corresponding period of the previous year, household expenses for final consumption reduced by 4.5 %. Affected by the COVID-19 crisis, expenditure of households reduced markedly in two main expenditure groups: on transport – by 9.1 %, and recreation and culture – by 15.3 %. 

"When analysing GDP indicators in the 1st quarter of 2020, it must be taken into account that emergency situation due to COVID-19 outbreak in Latvia was declared on 12 March 2020, thus directly affecting only last 3 weeks of the quarter," the CSB noted.

Commenting on the figures Swedbank said: "[The] Fall in GDP was observed due to falling private consumption, while other components actually performed better than in 2019. The commendable performance in exports and investment is not expected to continue in Q2. Several indicators point to a sharp decline in activity in April. Some rebound is observed in May, but activity levels are still muted. Therefore, the bulk of virus’ impact is expected to be seen in Q2 figures. Swedbank expects GDP to contract by 7.5% in 2020 and recover only modestly in 2021 (by 4.3%)."

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