Analytics, Economics, Export, GDP, Latvia, Markets and Companies

"During the first few months this year, inflation was much smaller than anticipated, and even a deflation was recorded in January and February. This means that residents' purchasing capacity will grow faster, and domestic private consumption will have a more favorable effect on the GDP growth," explained Strasuna.

Nevertheless, the GDP growth forecast is smaller than in the past two years due to weak external environment and increasing competition on the global market, which will slow down Latvian exports' growth.

"Latvia's growth model will still be based on exports, and we expect positive and balanced economic growth in the country in the next two years," said Strasuna. Latvian producers have improved their competitiveness – they have reduced production costs and increased prices for their products. New niche markets are being found consistently, where Latvian products are in demand, she added.

Investments must be continued in order to ensure further growth, stressed the economist. In 2011, the bulk of investments went into machinery and equipment, in 2012 – in infrastructure facilities and buildings. It is likely that most investments this year will again go to machinery and equipment.

As reported, Latvia's GDP increased 5.6% last year from 2011, whereas GDP growth in the last quarter of 2012 was 5.1% as compared to the fourth quarter of 2011.

According to seasonally unadjusted data, Latvia's GDP in the fourth quarter last year increased 1.4% from the third quarter last year.