In recent months there has been a tangible rapid drop of foreign demand, which has had a negative impact on the development of Latvian exports. For the forth consecutive month the value of exports has gone down by more than 10%, according to data from the Ministry of Finance.
The ministry notes that a comparison of data on Latvia’s foreign trade in July 2023, as compared with July 2022, shows that the value of the country’s exports has gone down by 15%.
In the first seven months exports of goods were 5.8% lower when compared with the same period of 2022.
At the same time, it should be mentioned that the export value went down from a very high level of last year thanks to growth of prices of ram materials and growth of re-export volumes.
In July the value of exports accounted for EUR 1 363 million, which is equal to the average monthly export value in 2021. Nevertheless, this year will be difficult for exporters. It is expected that a drop equal to that of July will continue in the coming months.
Development of exports of goods in Latvia was influences by weak external demand, especially in the European Union, which is the biggest export market for Latvian goods.
The growth of EU’s economy stopped in Q2 2023. For comparison, in the two previous years it continued growing uninterrupted. Economic decline in Estonia, Poland, Sweden and Germany in Q2 had a negative impact on Latvia, considering these are the country’s biggest export directions in Europe.
Looking at the economic sentiment of EU businessmen and consumers, it should be concluded that it continues going down. In August 2023 the economic sentiment in the EU went down again in sectors important for exports of Latvian goods such as manufacturing and construction.
These sectors have a direct impact on Latvia’s export of timber, metalworking, and construction materials.
Also read: Inflation is over and will continue at the same time, expert says