The current account surplus slightly down in September, goods and services trade balance much improved
Surplus remained in the balance-of-payments current account in September but it decreased compared to previous months.
The value of foreign trade transactions continued to rise, the value of both services extended (primarily transportation or passengers and cargoes) and received was up, and the total balance of goods and services trade improved substantially month-on-month.
For the first time since September 2008, however, no surplus of the income account was observed, for profit replaced losses that had lasted two years in the item of the income account that characterizes the functioning (the size of reinvested profit) of direct investment enterprises in Latvia.
According to the three-month operational data, the current account surplus shrank in the third quarter (in absolute terms and relative to the forecast GDP), reflecting the increase in economic activity in Latvia. Exports are on the rise and, along with the resumed industrial production, also imports necessary for production; the foreign direct investment enterprises in Latvia are functioning more successfully.
A substantial increase in the current account surplus in not expected in the near future.
- The development of the goods and services trade balance will be affected by changes in foreign demand, of which the European Commission has issued a more cautious assessment reflected also in the confidence or future prospects assessment by entrepreneurs.
- As economic growth resumes, no losses by foreign investment companies are expected, which will translate into a negative contribution to the balance-of-payment income account.