External trade grew in May
In May, 2012, the external trade turnover grew 5.3% month-on-month, reaching 1,253.3 mil. lats. The goods external trade turnover grew 6.5% year-on-year.
The export value of goods grew 9.0% month-on-month. The export growth in a breakdown by groups of goods continued the earlier trends: the fastest growth was observed with base metals and their products, mineral products, paper pulp and wood pulp as well as food industry products. The exports of vegetation products dropped, however, and a small drop was observed in the exports of mechanical devices and chemical products.
The Business Climate Indicator (BCI), which dropped slightly both in May and June, is evidence to the deterioration of the economic environment in the euro area. However, in the countries closest to Latvia which are its main trading partners the situation continued to be stable: this is borne out by the confidence indicators in June published by the European Commission.
The goods import value increased 2.6% over that in April. During this time, the imports of food industry products, base metals and their products as well as paper pulp and wood increased while the imports of mineral products, textiles and chemical industry products dropped. The rapid rise in exports was not followed by a rise in goods imports, for during this period some branches were less active and the global prices of raw materials dropped.
Despite improvements observed in the labour market, domestic consumption still is not pressuring a rise in imports of consumer goods. Even though a rise in nominal salaries was observed in the first quarter in Latvia, there was only insignificant growth in the real purchasing power. The unemployment level has been dropping gradually, however. The growth in exports in May is related, in part, to the base effect since exports had dropped in previous months. Yet the growth in branches related to natural resources and production indicates that the weakening of the economic situation in some European countries has not had a significant effect on the Latvian economy.