Latvia’s GDP increases 5.1% in Q3 2021

In Q3 2021, compared to Q3 2020, gross domestic product (GDP) rose by 5.1 %, according to seasonally and calendar non-adjusted data at constant prices.
In Q3 GDP at current prices was EUR 8.9 billion. As compared to the previous quarter, GDP went up by 0.6 %, according to data compiled by the Central Statistical Bureau.
In Q3 2021, compared to the same period of the previous year, drop in value added in agriculture sector was estimated at 9.3 % (of which, drop in crop production of 12.5 %, but in livestock production – rise of 0.4 %). In turn an increase of 2.0 % was observed in forestry and logging, but in fishery there was a drop of 2.0 %.
Significant contribution in total value added growth was provided by successful activity in manufacturing – rise of 7.9 % (increase was observed in 17 out of 22 sectors). A steady growth for several consecutive quarters was observed in the largest manufacturing sector – manufacture of wood and of products of wood (rise of 4.5 %). Significant increases were also observed in other manufacturing sectors: manufacture of chemicals and chemical products (of 37.1 %), manufacture of furniture (24.1 %), manufacture of fabricated metal products (9.1 %).
In other industry sectors results of activity are various: in mining and quarrying growth comprises 8.1 %, but decrease was observed in electricity, gas, steam and air conditioning supply of 7.8 % and water supply; sewerage, waste management and remediation activities – of 1.9 %.
Due to the increase in construction costs and the decrease in the number of active objects, the volume of the construction sector at constant prices decreased by 3.3 %. It was negatively affected by the decline in construction of buildings (of 12.8 %) and specialized construction work which was carried out 3.5 % less (drop in 3 out of 4 sub-groups). In turn, development of the sector was positively promoted by an increase of 4.4 % in civil engineering work carried out (rise in all three sub-groups – construction of roads and railways – of 4.8 %, construction of utility projects – of 3.4 % and other civil engineering projects n.e.c. – of 3.5 %).
In Q3 2021 trade sub-sectors rose significantly: in trade and repair of motor vehicles and motorcycles – of 19.5 %, in wholesale trade – of 8.6 %. In retail trade increase (of 4.4 %) was promoted by rise in retail sale of non-food products by 8.1 %, but in retail sale of food products there was a fall of 2.2 %.
Growth in transport and storage sector (of 5.4 %) was positively affected by land and pipeline transport – by 0.7 %, air transport – by 3.6 times, warehousing and support activities for transportation – by 8.3 %, postal and courier activities – by 6.8 %. While development of the sector was negatively affected by drop of 8.0 % in water transport sector.
Increase in the value added in information and communication sectors of 9.5 % promoted the rise in volume in information services of 15.3 %, in computer programming and consultancy sector – by 13.2 % and in telecommunication services – by 2.4 %.
Increase of 41.7 % in financial and insurance activities was ensured by a successful activity of all sub-sectors this quarter. In financial service activities there was an increase in commission income, as well as transactions with financial instruments made a profit (in contrast to losses in the corresponding period of the previous year). In insurance, reinsurance and pension funding there was an increase both in insurance, where there was a rise in gross premiums written, and total contributions rose in private pension plans (3rd pension pillar).
Increase of 10.5 % in professional, scientific and technical activities sector was significantly promoted by advertising and market research (of 32.5 %), legal and accounting activities (12.3 %) and activities of head offices, management consultancy activities (10.7 %).
Administrative and support service activities rose by 5.2 % (increase was observed in 3 out of 6 sub-sectors). The most significant growth had travel agency, tour operator reservation services sector, which was affected by measures imposed for restriction of COVID -19 pandemic – by 68.4 %, rise in rental and leasing services sector comprised 16.9 %, labour recruitment and provision of personnel – 4.7 %. Reduction was observed in security and investigation activities (of 4.9 %), building maintenance and landscape architectural services sectors (3.5 %) and office administrative, office support and other business support activities (6.3 %).
In Q3 the volume of taxes on products (value added tax, excise and customs taxes) rose by 4.1 %, which was affected by growth in largest group of taxes on products (income from value added tax) and reduction in excise duty revenues.
In Q3 2021, total expenditure rose by 7.9 %, which was mainly affected by increase in total household expenditure of 9.0 %. Total household expenditure was promoted both by reduction of unemployment, and increase of average labour remuneration and rather low Covid-19 restrictions. Household expenditure increased in main consumption groups: purchase of food products – by 1.8 %, expenditure on housing – by 2.3 %, expenditure on transport – by 11.9 %. Household expenditure on recreation and culture rose by 16.3 %. This group consists of household expenditure on purchase of audio-visual, photographic and information processing equipment, purchase of recreational and cultural items, purchase of goods related to garden and pets, purchase of recreational and cultural services, purchase of newspapers, books and stationary, as well as package holidays purchased by households. Expenditure of households on accommodation and catering services has increased by 2.5 %, which is largely due to the low base effect in 2020 and still lags behind significantly from the level of 2019.
Government final consumption expenditure grew by 4.4 %.
Investment in gross fixed capital formation increased by 6.0 %. Investment in machinery and equipment (of which in transport vehicles) rose by 16.0 % and in intellectual property products – by 18.3 %, but drop in construction comprised 3.3 %.
Exports of goods and services grew by 5.4 %. Exports of goods increased by 4.4 %. Main products exported this quarter were wood and products of wood, as well as electrical machinery and equipment. Exports of services increased by 8.6 %. Rise was mainly affected by exports of computer services and transport services.
Imports of goods and services increased by 13.9 %. Imports of goods increased by 11.8 %, but imports of services – by 27.5 %. Mostly electrical machinery and equipment, mineral products, as well as machinery and equipment n.e.c. were imported. Imports of transport services and other business services increased.