In Q3 2023, as compared to Q3 2022, Latvia’s gross domestic product (GDP) went down by 0.7%. As compared to the previous quarter, GDP went up by 0.2%, according to seasonally and calendar non-adjusted data at constant prices from the Central Statistical Bureau of Latvia.
In Q3 GDP at current prices was EUR 10.6 billion.
Data shows that in the nine months of 2023, as compared to the same period of 2022, GDP at current prices has increased by 5.5% and comprised EUR 29.9 billion, however, at constant prices GDP fell by 0.6%.
In Q3 2023, as compared to the corresponding period of the previous year, as services sectors remained at the level of the previous year, but producing sectors fell by 4.0%, total value added has reduced by 1.1%.
A drop in agriculture sector was estimated at 9.4%, which was affected by crop production assessment (drop of 11.2%) and increase in livestock production (of 0.6%). A fall was observed in fishery (of 6.2%), as well as in forestry and logging sector (13.8%).
A prolonged period of recession (drop in volume for the fifth consequent quarter) was observed in manufacturing, which reduced by 6.3%. It was significantly affected by a reduction in the largest manufacturing sector – manufacture of wood and of products of wood by 6.5% (mainly in sawmilling and planing of wood; impregnation).
Different trends can be observed in other significant manufacturing sectors –
increases in manufacture of food products (of 2.2%), manufacture of electrical equipment (1.3%) and manufacture of computer, electronic and optical products (8.1%). While a decrease is observed in manufacture of fabricated metal products (of 5.8%), manufacture of other non-metallic products (18.2%) and manufacture of furniture (26.9%).
A drop in other industry (of 9.3%) was affected by reduction in electricity, gas, steam and air conditioning supply (3.1%) and mining and quarrying (24.7%). In turn, there was an increase in water supply; sewerage, waste management and remediation activities (of 2.7%).
The largest positive impact on total economic development (+0.9 percentage points) was provided by a significant rise in construction sector (of 16.1%). Increase was observed in all three construction sub-sectors: construction of buildings rose by 33.2%, work carried out in civil engineering – by 2.3% and specialized construction work carried out – by 16.6%.
There was a drop in trade of 3.6%, which was affected by a fall in wholesale trade of 5.9%.
A recession in retail trade (of 3.9%) was promoted by the drop in retail sale of food products and retail sale of non-food products – by 3.2% and 4.3%, respectively. Dynamic activity is still observed in trade and repair of motor vehicles and motorcycles – an upturn of 5.9%.
Transport and storage sector (of 9.8%) was negatively affected by a drop of 4.5% in land and pipeline transport activity, of 20.3% in water transport sector, of 18.6 % in warehousing and support activities for transportation, of 9.5% in postal and courier activities. In turn positive contribution was reached by growth in air transport sector (by 8.9%).
Positive development in accommodation and food service activities sector was ensured by catering (rise of 3.8%), while in accommodation sector there was a drop of 1.3%.
In information and communication sector there was a drop this quarter (of 1.0%). This was facilitated by a decrease in volume of provision of information services (of 3.5%), as well as by provision of telecommunications services (15.2%), while an increase (of 7.5%) was observed in computer programming and consultancy.
Fall in financial and insurance activities of 14.9% was affected by a reduction in financial service activities of 23.2%.
There was an increase in insurance, reinsurance and pension funding and activities auxiliary to financial services and insurance activities (of 3.9% and 4.8%, respectively). Insurance, reinsurance and pension funding was promoted by increase in gross premiums written in non-life insurance and reduction in total gross claims paid, as well as increase in total contributions in private pension plans.
Drop in volume of professional, scientific and technical activities of 5.4% was affected by reduction of activity in provision of advertising and market research – by 41.3%, legal and accounting activities – by 4.5%. In turn positive contribution to the development of the sector was reached by growth in activities of head offices, management consultancy activities and advertising and market research (of 3.2%), provision of veterinary services (11.6%), as well as development of scientific research work (2%).
Over a longer period of time administrative and support service activities show a steady growth (rise of 2.1% in Q3). The situation varies from sector to sector – positive development trends can be observed in rental and leasing services sector (increase of 7.9%), security and investigation activities (2.0%), building maintenance and provision of landscape architectural services (15.7%).
In Q3 a negative impact on the development of sector was observed in labour recruitment and provision of personnel – a drop of 17.9%, in office administrative activities (fall of 3.7%), as well as in travel agency, tour operator reservation services (reduction of 4.2%).
Reduction of 1.2% on taxes on products (mainly value added tax, excise and customs taxes) was determined by drop in income from excise tax.
In Q3 2023, compared to the corresponding period of the previous year, total household expenditure decreased by 1.3%. Volume of food products purchased both in retail sale and in e-environment has reduced by 2.1%. Expenditure on housing, water, electricity, gas and other fuels has decreased by 3.4%. Households spent 4.6% more on transport (public transport, purchase and exploitation of transport vehicles).
Government final consumption expenditure grew by 7.7%.
Investment in gross fixed capital formation rose by 3.1%, of which investment in dwellings, other buildings and structures has grown by 16.0%. In turn, investment in machinery and equipment (of which in transport vehicles) reduced by 7.1% and investment in intellectual property products (research, computer software, databases, copyrights, etc.) – by 1.4%.
Exports of goods and services fell by 11.8%, of which exports of goods by 14.7%, but exports of services – by 4.0%. The main commodities in exports were wood and products of wood (except furniture), machinery and mechanical appliances as well as electrical machinery and equipment. In Q3, the main services exported were exports of transport services, computer services and other economic activity made up by R&D services, professional and management consulting services, technical, trade-related and other business services.
Imports of goods and services decreased by 8.3%, of which imports of goods – by 9.5% and imports of services – by 1.9%. Mainly, mineral products, electrical machinery and equipment, machinery and mechanical appliances, vehicles and associated transport equipment were imported. Main services imported were transport services and other economic activity services.
Compared to Q3 2022, in Q3 2023 compensation of employees increased by 11.6%, of which total wages and salaries by 11.9% and employers’ social security contributions by 10.4%.
The largest growth in compensation of employees was in agriculture, forestry and fishing sector (of 21.7%); arts, entertainment and recreation, other service activities (13.9%) and in professional, scientific, technical activities and administrative and support service activities (12.6%). Compensation of employees in services sectors has risen on average by 11.8%.
Gross operating surplus and mixed income decreased by 9.0%, whereas the balance of taxes on production and imports and subsidies went up by 2.7%.
Also read: Latvenergo’s profits up 2.7 times in the past nine months
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