Analytics, Banks, Direct Speech, Export, Financial Services, GDP, Latvia
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Thursday, 28.03.2024, 21:57
The current account deficit was 37.2 mln euro in Latvia in the 2Q of 2016
In publishing the second quarter
data, revisions of data for 2014, 2015 and the first quarter of 2016 were made
in accordance with the data revision policy.
In the second quarter of this year, the goods
balance deficit
was 474.1 mln euro (7.6% of GDP). The export and import of Latvian goods
decreased in the second quarter by respectively 1.1% and 3.2% year-on-year.
The potential of goods export is still curtailed by the uneven
development of the main trading partners, the drop in export prices and weak
external demand, whereas the prolonged stagnation in goods import is related to
the dropping of oil prices.
In the goods export, the greatest year-on-year
growth in the second quarter was posted by plant-based products (27.1%),
construction materials (20.6%), chemicals (13.6%), foodstuffs (14.4%) and wood
and wood products (5.2%). The year-on-year growth was unfavourably impacted by
the decreased exports of mechanisms and electrical equipment, mineral products,
textiles and textile products, base metal products and optical equipment.
Goods imports decrease
year-on-year was primarily determined by goods related to re-exports: mineral
products, mechanisms and electrical equipment and base metal products.
The positive balance of services, 436.2 mln euro, diminished
slightly year-on-year, reaching 7.0% of GDP. The changes in the positive
balance resulted from the decrease in rail and sea transport services for
non-residents as well as the increase in transport services received abroad.
In the second quarter of 2016, the primary
income account
turned negative quarter-on-quarter (68.6 mln euro or 1.1% of the projected
GDP). This resulted from dividends paid to investors in Latvia. European
Union (EU) funds inflows amounted to 72.7 mln euro (1.2% of GDP; 60.2% less
than in the previous quarter), yet at the same level as in the respective
period of last year.
The balance of secondary income increased quarter-on-quarter and
amounted to 66.2 mln euro or 1.1% of GDP. The inflows of EU funds
remained at the level of the previous quarter, but the annual payments to the
EU budget were less the amount of value added tax and gross national product EU
own funds and thus determined the increase in the secondary income balance.
The positive balance of the capital account dropped almost by half
quarter-on-quarter (to 62.8 mln euro or 1.0% of GDP), resulting from decreased
inflows of EU funds.
In the second quarter of 2016, the inflows of finances into
Latvia (884.5 mln euro) were smaller than the financial assets deposited abroad
(989.2 mln euro). The most important transactions on the asset side of the
financial account were
the investments by the central bank in debt securities (728.2 mln euro). The
most significant transactions on the liabilities side of the financial account
were an increase in the government debt securities liabilities to non-residents
(585.4 mln euro), money flows within the TARGET2 payment system (1.3 bln. euro)
and the drop in non-resident deposits with Latvian credit institutions (764.2 mln
euro).
Foreign direct investment in Latvia shrank by 168.6 mln euro.
Investments, in the form of debt instruments, grew by 155.1 mln euro.
Investments in own capital were negative (323.7 mln euro) primarily because of
changes in Swedbank Latvija's equity.