Latvia’s gross domestic product may have declined by 4-4.7% in Q3 compared to the same period of 2019, according to bank analysts.
Swedbank chief economist in Latvia Liva Zorgenfreija predicts Latvia’s GDP in Q3 may have declined by 4% YoY in Q3.
At the same time, she mentioned that compared to Q2 Latvia’s economy might have experienced a very rapid increase, recovering a large portion of what was lost in the first half of the year. Compared to Q2, Latvia’s GDP may have increased by about 6%.
“Growth is likely to be observed in sectors like retail trade, where a rapid recovery has taken place shortly after the crisis and has exceeded previous year’s levels. Rapid improvement has also been observed in processing industry. Still, the industry is behind levels of 2019. The biggest negative contribution remains in sectors associated with transports and tourism, which remain behind pre-crisis levels,” explained Zorgenfreija.
Luminor economist Peteris Strautins predicts Latvia’s GDP may have declined by 4.5% in Q3 when compared to the same quarter of 2019. Compared to the previous quarter, GDP may have increased by 5.3%.
He explained that the biggest increase might be observed in agriculture and forestry thanks to good harvest. There are also hopes for increased trade.
“VAT in most industries has reduced. Hotel, restaurants, leisure and entertainment sectors have suffered a decline measured in dozens of per cent, though it was milder than in Q2. Transport industry has declined by about one-fifth. Other industries have declined by one-tenth, because less electricity has been produced,” Strautins mentioned.
SEB Bank macroeconomic expert Dainis Gaspuitis predicts that Latvia’s economy may have experienced a decline of 4.7% in Q3 when compared to the same quarter of 2019.
“Q3 for the economy passed more or less under optimism. This is why we will likely observe stable increase when compared to Q2. Compared to 2019, it will have been possible to cover part of the decline because conditions have so far remained complicated to more or less equalize negative consequences,” said Gaspuitis.
At the same time, he stressed – depending on the recovery, it might be possible to withstand the second COVID-19 wave, which looked to be longer than the first.
Gaspuitis mentioned the biggest decline would remain in the accommodation and catering sector, art and entertainment sector. A considerable decline remains in the transit sector.
“Generally there are few possibilities to see some outstanding positive surprises even though the recovery itself is already realistic. Positive developments have been observed in retail trade. It is possible there was growth in agriculture and state administration,” admits Gaspuitis. (BNN/Business World Magazine)
