income account

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 2011 the current account deficit of the balance of payments was 170.9 million lats or 1.2% of the forecast GDP. The current account surplus of 46.2 million in the fourth quarter notwithstanding, the overall annual balance was notably affected by one-off substantial purchases of investment goods made in the third quarter and driving up imports of goods considerably. A more successful performance of the companies owned by foreign investors was another factor expanding the current account deficit.

In June, as the reinvested profits of foreign direct investment companies increased and the goods trading balance deteriorated as a result of goods purchases transactions, the current account balance was negative (-61.9 mil. lats). Yet in the second quarter and first six months of 2011, by monthly data, the current account balance was positive. In the first six months, it could amount to 1.4% of the forecast GDP. (The publication of Latvia's balance of payments second quarter data is expected on 2 September.)

The current account surplus in April reached 41.3 mil. lats. The substantial month-on-month improvement was primarily fostered by the improved trade balance. The goods and services foreign trade balance was positive in April at 4.5 mil. lats. As goods imports contracted at a notably faster pace than exports, the goods trade deficit contracted by more than 40 mil. lats, but a small positive balance increase in the service sector was determined by a successful development of cargo transport services by rail.

According to the monthly data, in the first three months of 2011 combined, the current account surplus was 36.8 mil. lats, with March posting a small deficit in the amount of 17.1 mil. lats. The current account deficit in March was substantially affected both by the negative balance of the income account and the increase in the negative balance of goods trade transactions.

In February of this year, just as in January, a current account surplus was observed, which reached 19.7 mil. lats. 

In January 2011 the balance-of-payments current account surplus reached 34.3 mil. lats, and that was primarily the result of the goods and services sales as well as the improvement of the income account balance compared to previous months.