The current account surplus in February determined by the amount of transfers
In February of this year, just as in January, a current account surplus was observed, which reached 19.7 mil. lats.
The influence of global prices on the flows of Latvian foreign trade is not symmetrical because of the different structure of Latvian goods imports and exports. The export value of goods continues to rise (in February it grew 3.2% month-on-month), but the import value of goods at the moment does so at a faster pace as it reflects the import of intermediate consumption goods and energy resources essential to production and the rise of the prices of the above in the world. The value of services rendered to non-residents dropped in February as compared to January and the drop was observed mostly in such groups of services as financial services and other business services. The import of services, on the other hand, was increased by the rise in the value of financial services received. The total goods and services trade balance was negative (‑16.7 mil. lats).
The banking sector made a small profit in February and the positive balance of the revenue account was quite moderate (2.4 mil. lats). Thus, compared to January, the surplus of the current account was significantly increased by the rise in current transfers. For example, Latvia received 46.5 million lats from the European Agricultural Guidance and Guarantee Fund.
The negative balance of the finance account was 35.1 mil. lats in February. Liabilities of the banking sector continued to drop, new government loans were not taken out and no significant direct investment activity was observed. The publicly available announcements on plans to invest in increasing production capacities or creating new production units reflect the slight amount of optimism that is present also in the improved confidence indicators. In the near future, however, the activity in foreign trade transactions could drop off slightly as indicated, for instance by the consolidation plans of several EU countries as well as uncertainty regarding the scale of the unrest in the Middle East and its possible solutions. These factors have a dampening effect on foreign demand as well as putting a downward pressure on the global price levels.