Latvia’s GDP up 6.7% in first quarter of 2022

Compared to Q1 2021, gross domestic product (GDP) rose by 6.7% in Q1 2022, according to seasonally and calendar non-adjusted data at constant prices.
In Q1 GDP at current prices was EUR 8.1 billion. As compared to the previous quarter, GDP went up by 3.6% (according to seasonally and calendar adjusted data at constant prices).
In Q1 2022, compared to the same period of the previous year, growth in agriculture sector was estimated at 5.3% (of which, rise in crop production of 11.0%, but in livestock production – of 2.3%). Increase in fishing sector was 3.6%, while in forestry and logging there was a decrease – of 7.9%, according to data compiled by the Central Statistical Bureau.
Significant contribution in total value added growth was provided by successful activity in manufacturing – rise of 8.3% (increase was observed in 19 out of 22 sectors). It was greatly promoted by manufacture of wood and of products of wood (rise of 7.7%), where significant growth (of 18.9%) was in manufacture of products of wood (veneer sheets and wood-based panels, other builders’ carpentry and joinery, wooden containers), in turn, a drop of 7.3% was in sawmilling and planing of wood; impregnation of wood. Significant increases were also observed in other manufacturing sectors: manufacture of fabricated metal products (12.9%), manufacture of non-metallic mineral products (19.5%), manufacture of chemicals and chemical products (42.0%).

In turn, 2.2% drop was observed in the second largest manufacturing sector – manufacture of food products.

A growth of 12.0 % in mining and quarrying could not compensate reduction in electricity, gas, steam and air conditioning supply (of 19.3%) and water supply; sewerage, waste management and remediation activities (10.5%), causing a drop in other industry sectors of 12.7%.
Reduction in volume of construction sector (of 8.4%) was affected by unfavourable weather conditions, rising construction costs and tense political situation, which caused instability in logistics processes. In all three construction sub-sectors there was a drop: construction of buildings fell by 7.1%, work carried out in civil engineering – by 15.8% and specialized construction work was carried out less by 7.7%.
In Q1 2022 mitigation of restrictions for the limitation of Covid-19 infection positively affected all three trade sub-sectors – in trade and repair of motor vehicles and motorcycles there was an increase of 4.2%, in wholesale trade – of 5.5%. In retail trade increase (of 13.0%) was promoted by rise in retail sale of non-food products by 20.0 % and rise in retail sale of food products by 2.4%.

As restrictions on economic activity reduced gradually, growth in transport and storage sector (of 3.0%) was positively affected by air transport (increased 3.3 times).

Water transport sector rose by 13.4%, warehousing and support activities for transportation – by 4.9%, while postal and courier activities reduced by 6.5%, but development of land and pipeline transport remained at the level of the respective quarter of the previous year.
Reduction of travelling, movement and epidemiological restrictions promoted positive development of accommodation and food service activities sectors (rise of 83.8%), which was affected by accommodation sector – by 97.4%, provision of food service activities – by 80.8%.
Increase in the value added in information and communication sectors of 8.6 % was affected by the rise in volume in provision of telecommunication services of 11.1% and in computer programming and consultancy sector – by 9.3%, while information services showed a drop of 0.7%.
Increase of 3.4% in financial and insurance activities was positively affected by activities auxiliary to financial services and insurance activities, which rose by 41.1%. Fall in financial service activities of 6.3% and in insurance, reinsurance and pension funding – of 0.1%.
Increase of 16.7% in professional, scientific and technical activities sector was promoted by all sectors, however, the largest increase was in legal and accounting activities (26.9%) and other professional, scientific and technical activities (21.4%).

Administrative and support service activities rose by 19.2%, as an increase was observed in all sub-sectors).

The largest growth (2.3 times) had travel agency, tour operator reservation services, which was affected by measures imposed for restriction of Covid-19 pandemic during the last two years. There also were growths in the largest sub-sectors: in building maintenance and landscape architectural services (of 13.1%), rental and leasing services sector – of 21.1%, but labour recruitment and provision of personnel – of 40.9%.
In Q1the volume of taxes on products (value added tax, excise and customs taxes) rose by 15.8%, which was promoted by growth in largest groups of taxes on products – both in value added tax and excise duty revenues.

In Q1 2022, compared to the corresponding period of the previous year, total household expenditure rose by 15.3%.

Expenditure of households on accommodation and food service activities, as well as on recreation and culture was significantly affected by the mitigated Covid-19 restrictions and expenditure in the respective groups rose by 92.0% and 50.5%. Expenditure of households on transport (public transport, purchase and exploitation of transport vehicle) has grown by 12.6%. Consumption of food products purchased both in retail sale and in e-environment increased by 3.3%.
Government final consumption expenditure remained at the level of the previous year, rising only by 0.3%.
Investment in gross fixed capital formation increased by 1.9%. Investment in machinery and equipment (of which in transport vehicles) rose by 11.2% and in intellectual property products – by 24.6%, but investment in dwellings and other buildings and structures reduced by 8.0%.
Exports of goods and services grew by 8.6%. Exports of goods went up by 6.8%. Main products exported were wood and products of wood, as well as mineral products. Exports of services increased by 14.5%, rise of which was mainly affected by transport services, computer services and other economic activities.

Imports of goods and services grew by 15.6%.

Imports of goods went up by 14.1%, but imports of services – by 24.7%. In imports of products mineral products and electrical machinery and equipment were imported the most, but rise in imports of services was mainly determined by transport services as well as imports of other economic activity.
Compared to Q1 2021, in Q1 2022 compensation of employees at current prices increased by 13.2%, of which total wages and salaries – by 12.8%, but employers’ social security contributions – by 15.3%.
The sharpest increase in compensation of employees was registered in arts, entertainment and recreation and other services group – by 29.3%, information and communication sector – by 17.7% and professional, scientific and technical activities sector – by 16.7%. In services sectors compensation of employees rose by 15.9%.
Gross operating surplus and mixed income increased by 23.8%, whereas the balance of taxes on production and imports and subsidies rose by 30.3%.