According to flash estimate, the annual contraction of GDP in the fourth quarter has diminished

Operative branch indicators as well as the measurements of entrepreneur and consumer mood indicate that in the fourth quarter the signals of economic stabilization have become more pronounced and in some branches, oriented to exports, growth has already resumed. Although in the flash estimate of gross domestic product these positive developments find a lesser reflection, conclusions about the reason for this difference will only be reliably made after receiving the adjusted and expanded GDP data in March of this year.

According to the flash estimate by the Central Statistics Agency, GDP in the fourth quarter was smaller by 17.7% than a year ago, which is a slight improvement compared to the GDP annual drop of 19% in the third quarter. It must be noted that this improvement was determined by the low base of the respective quarter of the previous year. Recovery trends in the global economy and the rise in the competitiveness of Latvian producers promoted the development of export. The volume of processing industry production showed a quarterly growth. As a result, the pace of annual contraction slowed substantially, having a positive effect on GDP dynamics as well. The persisting weak domestic demand, however, determined continued recession in such branches of industry as trade, construction, and individual services.  Comparatively weak performance results can be expected also in transport as the operative cargo turnover data indicate.

In 2010 overall, it can be expected that along with continued improvement in foreign demand, economic recovery will be promoted by the development of export industries; if both structural reforms are carried out and budget for 2011 developed successfully a gradual renewal of domestic demand can also be expected in the second half of the year.