Banks, Financial Services, Foreign trade , Latvia

The goods external trade deficit grew to LVL 150.9 million in June, since the value of imports remained almost unchanged during the month, but the goods exports dropped somewhat. The annual growth rate of external trade, however, remains positive, writes LETA/Nozare.lv.

The value of services granted to foreigners grew substantially in June, and the positive balance in this account amounted to LVL 109.1 million. The increase in services exports was observed in all forms of transport (particularly in freight services by road transport) and there was a seasonal increase in the value of trip services.

The positive balance of current transfers account dropped to LVL 27 million in June, for the payments from the European Social Fund had yet to flow in. A total of LVL 57.8 million was received from EU funds in June, which was reflected in the positive balance increase in the capital account to LVL 56.1 million.

In the financial account, there was a small positive balance (LVL 3.4 million) in June. LVL 52.5 million (a greater amount than the previous monthly average this year) in foreign direct investment flowed into Latvia, indicating that Latvia, by retaining stable growth, continues to offer attractive investment opportunities to foreign investors, points out Brauksa.

Russia's confirmation of joining the WTO has been a positive development. Even now Russia is Latvia's third most important export partner (after Lithuania and Estonia), but the reduction of customs tariffs and other trade limitations will promote further development of economic ties. An increase in exports is also promoted by the attraction of foreign investment in various branches, including those related to production. However, it is necessary to keep in mind that external demand is still limited. Evaluating the possible development of the situation, the Latvian current account balance will likely continue to retain a small deficit, predicts Brauksa.