Compared with the same quarter of 2021, seasonally unadjusted calendar data from the Central Statistical Bureau (CSP), Latvia’s gross domestic product (GDP) has dropped by 0.6% in Q3 2022.
In fiscal prices Latvia’s GDP was equal to EUR 10.4 billion in Q3. Compared with Q2, Latvia’s GDP dropped by 1.7% (according to seasonally and calendar unadjusted data).
Compared to the same period of 2021, the general value added changes (and increase by 0.5%) were influenced by the manufacturing industries’ drop by 3.9% and the 2.2% increase in the service industries.
Despite the significant price increase in both crop production (by 36.0%) and livestock production (45.8%), the agricultural sector was assessed with a growth of 1.7% (of which, increase of 2.2% in crop production, and reduction of 0.5% in livestock production). Increase in forestry and logging sector was 11.0%, as well as in fishery – by 2.2%.
After continuous positive development trends (growth for eight consecutive quarters), manufacturing showed a decrease of 1.6%.
It was affected by the decline in the largest manufacturing industries – manufacture of food products fell by 2.0% and manufacture of wood and products of wood – by 9.0%.
Different trends are found in other manufacturing sectors – increases in manufacture of other non-metallic mineral products (by 11.9%), in manufacture of electrical equipment (8.9%), while a decrease is observed in manufacture of chemicals and chemical products – by 17.6%, in manufacture of fabricated metal products – by 1.4%.
Despite the 3.1% increase in mining and quarrying, there was an 8.5% drop in other industry sectors, due to the sharp increase in prices and decrease in consumption, which was affected by a drop of 14.1% in electricity, gas, steam and air conditioning supply and of 4.7% in water supply, sewerage, waste management and remediation activities.
For several quarters in a row, the construction industry has shown a reduction (by 13.6% in Q3). It is still negatively affected by the rising construction costs, which reduces demand, and the decline is observed in all three sub-sectors of the construction industry: construction of buildings decreased by 14.2%, work carried out in civil engineering – by 12.2% and specialised construction work carried out – by 13.3%.
There was a 10.3% drop in trade, which was affected by a fall in wholesale trade of 23.0%.
Positive contribution to the development of trade was generated by increase in trade and repair of motor vehicles and motorcycles (by 11.7%). The increase observed in retail trade (of 0.1%) was affected by an increase in retail sale of food products by 1.4% and a decrease in retail sales of non-food products by 0.5% (of which 2.7% drop in retail sale of automotive fuel).
Growth in transport and storage sector (by 0.6%) was positively affected by the increase in water transport sector by 18.1%, warehousing and support activities for transportation by 8.9%, as well as postal and courier activities by 2.3%. In turn, transport sector was negatively affected by development of land and pipeline transport – a drop of 6.6%.
The strongest positive impact on the growth of total value added was ensured by information and communication sector (increase of 14.2%), which came from the increase in largest sub-sectors: provision of telecommunication services by 24.9%, information services – by 12.2% as well as computer programming and consultancy sector – by 9.6%.
Fall in financial and insurance activities of 1.3% was negatively promoted by insurance, reinsurance and pension funding (by 25.6%).
In turn, growth was observed in financial service activities (by 0.3%) and activities auxiliary to financial services and insurance activities (by 19.1%).
An increase of 10.6% in professional, scientific and technical activities was significantly promoted by growth in legal and accounting activities (of 21.1%), activities of head offices, management consultancy activities (16.6%), as well as advertising and market research (29.5%).
A negative impact on the sector’s development can be seen in the provision of architectural and engineering activities; technical testing and analysis – a drop of 10.3%. A stable and long-term growth can be observed in administrative and support service activities, where the increase comprised 22.3% (growth in all sub-sectors).
The largest growth was observed in travel agency, tour operator reservation services (of 44.1%). Significant increases were also other sub-sectors: in labour recruitment and provision of personnel – by 34.5%, in rental and leasing services sector – by 30.3%, in building maintenance and landscape architectural services – by 14.5%, in office administrative activities – by 13.8%.
The volume of taxes on products decreased by 7.6% in Q3 this year, which was affected by the decrease in the largest groups of taxes on products – income from value added tax decreased by 8.3%, but excise tax revenues – by 1.5%.
Compared to Q3 2021, labour wages at current prices increased by 9.0%, of which total wages and salaries – by 9.5%, but the social security contributions paid by employers – increased by 6.5% in Q3 2022.
Compensation of employees increased the fastest in the information and communication sector (by 17.5%), in professional, scientific and technical activities, as well as administrative and support service activities (by a total of 15.1%), and in agriculture, forestry and fishing (by 11.2%). Compensation of employees in services sectors is 10.3% higher than a year ago.
Gross operating surplus and mixed income increased by 23.4%, whereas the balance of taxes on production and imports and subsidies grew by 9.0%.
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