current account

With exports of goods continuing on an upward trend, the current account of Latvia's balance of payments recorded a surplus of 22.1 million lats (0.5% of the forecast GDP) in the fourth quarter of 2012.

For a second consecutive month, a small surplus (1.3 mil. lats) formed in the Latvian balance of payments current account in December. Month-on-month, the surplus dropped because of the increased goods external trade deficit as the increase was only partially compensated by the increase in the positive balance of services trade.

A surplus of 53.6 mil. lats formed in Latvia’s current account in November 2012 as Latvian export growth exceeded that of imports and the amount of funding from the European Union (EU) increased and the income of foreign direct investors dropped slightly.

In October, the Latvian current account deficit rose slightly, to 46.4 mil. lats as a result of a rise in goods imports under the impact of some one-off transactions. As these are not factors that have a lasting influence, no substantial increase in the current account is expected in the coming months.

The rapid export growth, observed over the last few months, accounted for the fall of the current account deficit to 74.5 million lats or 1.9% of the forecast GDP in the third quarter of 2012.

CURRENT ACCOUNT BALANCE (% of GDP)

An increase in the goods exports in September and an influx of funds into the current transfers account ensured a 28.0 mil. lats surplus in Latvia’s current account.

Since a substantial growth in the exports of Latvian goods is continuing while import growth is more moderate, the current account deficit in August remained at a low level, i.e. 27.6 mil. lats.

The goods external trade deficit in August dropped to 117.3 mil. lats. Export growth was promoted by the competitiveness of Latvian exporters and their reorientation to the rapidly growing export markets.  

In July 2012 the Latvian current account deficit dropped to 22.2 mil. lats. With the goods and services external trade balance practically unchanged, the improvement of the current account was impacted by the influx of current transfers (primarily EU funds).

The goods exports in July grew at a more rapid rate than imports, and the goods external trade deficit shrank (to 144.9 mil. lats).  

In the second quarter of 2012, the current account deficit of Latvia's balance of payments amounted to 103.4 million lats or 2.7% of the forecast gross domestic product (GDP).

Note: Data adjusted starting with the first quarter of 2010.