Latvian economy shows weakest growth among Baltic countries in Q3

Latvia recorded the slowest economic growth among the three Baltic countries in the third quarter of this year as its gross domestic product (GDP) grew by 0.2 percent against the second quarter of 2016, the national statistics office said.

While a flash estimate of Latvia's GDP growth in the third quarter, which was released a month ago, suggested that the quarterly growth had been 0.3 percent, updated data revealed that the seasonally adjusted GDP had only added 0.2 percent.

Compared with the same period a year ago, Latvia's GDP increased by 0.3 percent in the third quarter of 2016.

The value of Latvia's GDP in the third quarter of 2016 was 6.4 billion euros in current prices and 5.6 billion euros in constant prices.

Lithuania's GDP, by comparison, expanded by 1.7 percent year-on-year and the Estonian economy showed 1.1 percent annual growth in the third quarter.

Commenting on Latvia's unimpressive performance, Swedbank economist Martins Kazaks said that the slowdown in Latvia's economic growth had probably hit its lowest point by now and that growth should pick up in following months.

This year, the Latvian economy is likely to grow by 1-1.5 percent against 2015, Kazaks said, projecting a growth rate closer to 2.5 percent for next year if EU funding flows into the economy as planned and households are ready to spend.

Peteris Strautins, a socioeconomics expert at DNB Banka, described Latvia's third-quarter economic performance as disastrous, noting that growth nearly ceased as its pace slowed to 0.3 percent in annual terms and 0.2 percent in quarterly terms.

Luckily, it is clear that these figures do not reflect structural issues, but rather a break in government-funded investment.

It happened at a time when lending growth had just resumed, and its effect on the economy was not yet being felt, while the impact of Russia's economic crisis remained strong, Strautins said. Endit