It’s possible Latvian gross domestic product (GDP) may have increased by 4.3 – 5% in the first quarter when compared to the same period of 2021, according to analysts of Latvian banks.
Citadele Bank economist Mārtiņš Āboliņš said in Q1 2022 Latvia’s GDP growth in comparison to Q1 2021 may have growth by 4.5 – 5%. When compared to Q4 2021, Latvia’s economy may have increased by 1 – 1.5%.
«I believe GDP indexes will be positive for the first quarter,» said Āboliņš.
He said good economic results are largely linked to low economic activity observed at the start of the year, when many sectors were still under tight Covid-19 restrictions. ‘This way commercial and a small portion of service sector will have experienced a large increase in Q1. The reason is because Covid-19 restrictions this year turned out softer than last year,’ said Āboliņš.
He also mentioned that since the start of Russia’s invasion of Ukraine, the general mood of residents and entrepreneurs has worsened somewhat. No changes are observed in other economic indexes. «Consumption is up, unemployment is down and consumption of electricity is higher than it was in previous years. The volume of freight in transit has increased as well,» added Āboliņš.
He also said the recession has not yet begun in Latvia. Āboliņš mentioned that in Q1 industry will demonstrate slight improvements.
Construction in Q1 may show some negatives, but in Q2 this industry will experience much more tangible growth, because the investment costs have increased significantly in the state budget.
SEB Bank’s macroeconomic expert Dainis Gašpuitis predicted that in Q1 2022 Latvia’s GDP may have increased by 4.3% when compared to the same period of 2021.
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«The year for the economy kicked on a strong note, which was enhanced by the optimism following the recovery after a winter spent under Covid-19 restrictions. This is clear from retail trade data and tax revenue. Confident growth continued in processing industry. High growth rate continued in the export sector. Transit demonstrated unexpectedly good results. Negative influence came from rapidly growing import volumes. All this has generally entered a transition phase. The situation is expected to turn very different by the end of the year,» said Gašpuitis.
The Central Statistical Bureau of Latvia plans to report a flash estimate of Latvia’s GDP on Thursday, 28 April.
Latvia’s GDP increased by 4.8% in 2021 when compared to 2020. In 2021 Latvia’s GDP in actual prices was EUR 32.917 billion.