Deficit in the current account remains in February

In February the negative balance of Latvia's current account was 38.7 mil. lats. This was the result of the increasing deficit in the goods external trade and the decrease in the partially compensating positive balance of the service external trade.

The goods external trade balance increased to 137.8 mil. lats. Albeit the goods export value increased in this period, a slightly more rapid increase in the goods import value was observed, in part explained by a rise in the prices of intermediate consumption goods and energy resources. The services external trade positive balance meanwhile dropped to 71.5 mil. lats. In the value of services granted to non-residents, the drop was primarily observed in transportation, travel, other business services and construction. At the same time, construction was among the groups that acted to increase the imports of services.

The positive balance of the financial account rose to 100.7 mil. lats in February. In the first months of the year, attracting of direct investment has slightly dropped off. The financial account inflows were impacted by an increase in short-term liabilities of the banking sector as well as by the fact that in February Latvia emitted securities in the amount of one billion US dollars in the international financial markets  (these government liabilities also determined an increase in the reserve assets of the financial account).

A positive impact on the Latvian balance of payments in the next few months could be had by the possible resumption of payments from EU funds that had been partially suspended. Because of the increasing costs of resources and the sluggish growth in Latvia's export partners, however, a substantial improvement in the current account is not expected in the near future.

Latvia's balance of payments (data)

APA: Opmane, I. (2020, 01. oct.). Deficit in the current account remains in February. Taken from https://www.macroeconomics.lv/node/2235
MLA: Opmane, Ieva. "Deficit in the current account remains in February" www.macroeconomics.lv. Tīmeklis. 01.10.2020. <https://www.macroeconomics.lv/node/2235>.

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