2011 begins with a current account surplus
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.
The goods and services trade balance was positive in January (12.1 mil. lats), with imports falling more rapidly than exports. Thus, according to the balance-of-payments data, the goods trade negative balance improved to 50.1 mil. lats, and the services exports exceeded imports by 62.2 mil. lats. This was primarily the result of the drop in shipment, trip, financial and computer service imports. In the largest group of services exports – shipments –export growth was observed only in shipment by rail segment.
Even though at the beginning of the year the activity in foreign trading tends to be at a seasonal low and January 2011 was additionally marked by the moderate economic growth in several important trading partners of Latvia, there is no basis for pessimism regarding the trading data expected in the next few months. The Baltic Dry index, which reflects the global demand for cargo shipments of goods necessary for production, has been on a gradual rise; the available data on the Harpex index (representing cargo shipments of a wider variety of goods) dynamics point to growing demand.
Compared to the end of 2010, when the reinvested profit of foreign direct investment enterprises was growing and substantial dividends were paid, the income account deficit contracted substantially in January and was at 5.2 mil. lats. The surplus in the current transfers account was ensured by the inflows of EU funds: more than 95% of the EU funds coming into the current transfers account were from the European Agricultural Guidance and Guarantee Fund and were received as subsidies for products.
Compared to previous months, foreign net direct investment inflows were on the rise in the financial account: about equal in own capital and other capital (liabilities to direct investors), net inflows amounted to 61.0 million lats total. The approving evaluation received in March by the Standard & Poor's international rating agency allows for a more hopeful view regarding future foreign direct investment.