Banks, Financial Services, Foreign trade , Investments, Latvia

The development of the services sector and the growth of export, that was slightly faster than that of import, ensured that the current account deficit was small, Bank of Latvia economist Ieva Brauksa writes in the central bank's portal Makroekonomika.lv.

"A positive development in March was the reduced negative balance of the external trade of goods as well as the increased value of services granted to non-residents. Deficit in the goods and services account dropped to LVL 27 million. In the export of services, growth was promoted by an increase in transport services (primarily in cargo shipments by rail and ships), writes LETA.

The Baltic Exchange Dry index, which characterizes the intensity of transports of dry cargo for industrial purposes, and the Harpex index that characterizes all kinds of goods transports by sea both pointed to a growth in the services trade activity. Both indexes have picked up after the drop at the beginning of the year.

The negative balance (LVL 54.1 million) of the revenue account was determined by the profits of the foreign direct investor enterprises and the dividends they paid. No substantial changes were observed in the current transfers account or the capital account; LVL 41 million was received in March from EU funds (primarily as a support to farmers) but greater inflows of funds are expected in the coming months after receiving the EU funds temporarily held back.

There was a small deficit (LVL 7.7 million) in the financial account in March. Operational data indicate that bank assets increased in this month because investments were made in foreign debt securities.

It is expected that a small current account deficit will remain in the coming months, but the future trends in economic growth will be determined both by the developments on the external markets and the ability of Latvian entrepreneurs to adjust to changes and perceive growth opportunities.