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International Internet Magazine. Baltic States news & analytics Saturday, 08.08.2020, 08:35

EcoMin: Latvian economy is past the worst of crisis, entrepreneurs have adapted to new situation

BC, Riga, 31.07.2020.Print version
The Latvian economy is past the worst of the crisis and entrepreneurs have adapted to the new situation, Economics Minister Janis Vitenbergs (KPV LV) told LETA.

According to a flash-estimate released today by the Central Statistical Bureau (CSB), in the second quarter of this year Latvia's GDP was 9.8 percent smaller than a year ago. 

Vitenbergs indicated that the second-quarter data reflects the hardest months of the Covid-19 crisis, but although the slump of nearly 10 percent can be considered deep, the worse case scenario had envisaged an even deeper recession. 

"This can be seen in other euro area countries where the epidemiological situation was much worse, for example, in Italy, Spain, France, where the economic downturn in the second quarter came close to 20 percent. Now, the hardest phase is already behind us, entrepreneurs have managed to adapt to the new circumstances," the economics minister said. 

Vitenbergs warned, however, that the recovery will not be even across all sectors of the economy. 

"For some industries like food services, accommodation, arts, entertainment, air transport and others, returning to the pre-crisis level will take more time. The government's decision on economic stabilization measures are therefore essential in the current situation. At the same time, we must not forget about future development - it is important to increase the capacity and competitiveness of Latvia's exporting companies," Vitenbergs said. 

Considering the current situation and latest statistics, the Economics Ministry project Latvia's GDP to drop 4 percent this year. The economy might return to positive growth by the end of 2020. 

As reported, during the second quarter of 2020, Latvia's seasonally and calendar-unadjusted gross domestic product (GDP) contracted 9.8 percent from the same period a year ago, according to a flash estimate released today by the Central Statistical Bureau.

According to preliminary calculations, the GDP was affected by output drop in producing sectors of 3.8 percent and in services sectors – 11 percent, of which in retail trade – 1.6 percent. Also, the volume of taxes on products collected reduced.

Compared to the first quarter of 2020, GDP fell by 7.5 percent (according to seasonally and calendar adjusted data).

In the second quarter of 2020, the value of Latvia's GDP was EUR 6.211 billion at constant prices, compared to EUR 6.715 billion in the first quarter of this year.

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