RIGA — In the second quarter of this year, Latvia’s gross domestic product decreased by the smallest amount since the crisis began in 2008.
Initial estimates by the country’s central statistics bureau show -3.9 percent year-on-year for the Latvian economy, seasonally adjusted, and grew 0.1 percent from the previous quarter. Industrial production increased by 6 percent over the second quarter and beleaguered retail also increased by 1.7 percent. The country seems like it will follow Lithuania in an export-led recovery, as its increase in the export volume remains one of the biggest in the European Union.
This marks the second quarter in a row to see quarterly growth, as the first quarter grew 0.3 percent from the fourth quarter of 2009, a fact the government is hailing as a sign that Latvia has emerged from its deep recession.
“The recession is over and on the basis of certain indicators it can be expected that in the second part of the year Latvia’s economy will regain growth in terms of both quarterly and annual indicators. This means a more positive gross domestic product, tax income, employment and other rates,” Prime Minister Valdis Dombrovskis said at a press conference on Monday.
Though the increase in economic activity is slight, the government said this stabilization is an important sign given that it had Europe’s worst downturn last year with a 19 percent year-on-year contraction of gross domestic product in the third quarter. Whether the improving economic indicators make a significant-enough impact in Latvian tax revenue come budget time this fall remains to be seen.
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