Macroeconomic development scenario
Latvian Ministry of Finance in January 2010, published a country’s macroeconomic development scenario for the next three years.
Main macroeconomic indicators (as to 02.10.2009)
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Prognosis | ||||||||||
| Gross domestic product (GDP), mln lats | 6393 | 7434 | 9059 | 11172 | 14780 | 16243 | 13043 | 11892 | 11861 | 12359 |
| growth at current prices, % | 11.0 | 16.3 | 21.9 | 23.3 | 32.3 | 9.9 | -19.7 | -8.8 | -0.3 | 4.2 |
| growth at constant prices, % | 7.2 | 8.7 | 10.6 | 12.2 | 10.0 | -4.6 | -18.0 | -4.0 | 2.0 | 3.8 |
| GDP deflator, % | 3.6 | 7.0 | 10.2 | 9.9 | 20.3 | 15.2 | -2.1 | -5.0 | -2.2 | 0.4 |
| CPI (December over December), % | 3.6 | 7.3 | 7.0 | 6.8 | 14.1 | 10.5 | -1.2 | -3.0 | -1.6 | 0.7 |
| CPI (year’s average), % | 2.9 | 6.2 | 6.7 | 6.5 | 10.1 | 15.4 | 3.5 | -3.7 | -2.8 | 0.0 |
| Average monthly wage of the employed in the economy, lats | 192 | 211 | 246 | 302 | 398 | 479 | 455 | 411 | 410 | 421 |
| growth at current prices, % | 11.4 | 9.6 | 16.5 | 23.0 | 31.5 | 20.5 | -5.0 | -9.8 | -0.2 | 2.7 |
| growth at constant prices, % | 8.3 | 3.2 | 9.2 | 15.5 | 19.4 | 4.4 | -8.2 | -6.3 | 2.7 | 2.7 |
| Employment, thsds | 1006.9 | 1017.7 | 1035.9 | 1087.6 | 1119.0 | 1124.1 | 997.0 | 941.6 | 940.0 | 950.4 |
| Employment growth, % | 1.8 | 1.1 | 1.8 | 5.0 | 2.9 | 0.5 | -11.3 | -5.6 | -0.2 | 1.1 |
| Jobseeker rate, % | 10.6 | 10.4 | 8.7 | 6.8 | 6.0 | 7.5 | 16.9 | 20.0 | 18.9 | 17.5 |
| Registred unemployment rate (years average), % | 8.6 | 8.8 | 8.0 | 7.0 | 5.7 | 5.3 | 11.9 | 13.8 | 12.7 | 12.6 |
| Exports of goods and services, mln lats | 2689.3 | 3268.2 | 4334.7 | 5014.3 | 6241.4 | 6792.2 | 5211.3 | 5289.5 | 5666.1 | 6104.8 |
| growth at current prices, % | 14.3 | 21.5 | 32.6 | 15.7 | 24.5 | 8.8 | -23.3 | 1.5 | 7.1 | 7.7 |
| growth at constant prices, % | 5.225 | 9.4 | 20.2 | 6.5 | 10.0 | -1.3 | -17.5 | 1.5 | 5.0 | 5.6 |
| Imports of goods and services, mln lats | 3493 | 4428.9 | 5637.8 | 7412.3 | 9219.5 | 8920.7 | 5421.6 | 4944.6 | 5174.7 | 5552.6 |
| growth at current prices, % | 19.8 | 26.8 | 27.3 | 31.5 | 24.4 | -3.2 | -39.2 | -8.8 | 4.7 | 7.3 |
| growth at constant prices, % | 13.1 | 16.6 | 14.8 | 19.4 | 14.7 | -13.6 | -35.0 | -9.7 | 2.6 | 5.2 |
| Balance of payments Current account balance, mln lats | -522.8 | -954.9 | -1131. 6 | -2510. 0 | -3327. 2 | -2051. 5 | 827.6 | 1051.0 | 1000.2 | 743.1 |
| as % of GDP | -8.2 | -12.8 | -12.5 | -22.5 | -22.5 | -12.6 | 6.3 | 8.8 | 8.4 | 6.0 |
In 2008 gross domestic product (GDP) drop in constant prices was 4,6%, caused both by internal and external factors. Initial contraction was caused by high inflation in 2007 and at the start of 2008 negatively impacting consumer confidence, as well as facilitating rise in unit labour cost, thus reducing competitiveness of Latvian producers. Burst of real estate bubble and rapid decline in credit growth rates had negative impact on domestic demand, which in previous years, was main source of growth. Resulting from this was contraction in retail sales and private demand at the start of 2008. Global financial crisis escalated in autumn of 2008 resulting in restricted capital flows, aggravating liquidity in financial sector. Changes in credit policies of banks and downgrades in Latvia’s sovereign credit rating substantially reduced available resources for investment. Additionally global demand declined leading to drop in exports.
In 2009 GDP continues to drop and in 1st half of 2009 GDP fell by 18.4% compared to corresponding period of previous year. Substantial drops where recorded in private consumption, gross fixed capital formation and exports, negative impact of which was slightly offset by fall in imports.
Full text on homepage Ministry of Finance of the Republic of Latvia. Main macroeconomic indicators (as to 02.10.2009)
Macroeconomic development scenario presentation
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