In the first two months of the year the current account surplus grows twofold

According to operational data, in February 2010 the current account surplus reached 54.5 million lats and in the first two months of this year 119.3 million lats, which is 3.5 times more than in the corresponding period of the previous year. That resulted from a better goods trade balance based on an upward trend in goods exports.

The services exports, on the other hand, are negatively affected by international competition for cargo transportation by rail and sea. The export of financial services has decreased whereas an increasing effect has had passenger transportation by air and construction abroad. Export of cargo transportation by truck has stabilized after a long drop last year.

The largest flows of finance in February were determined by the repayment of bank long-term borrowings using short-term foreign assets, but reserve assets continued to grow as the government deposited finances received from the International Monetary Fund.

Goods and transportation by air will continue to grow in the next few months. It is also possible that import growth will be more rapid for a short period as consumption grows as a result of payment of withheld pensions and spring holidays. An important upward risk regarding imports is created also by the growing prices for oil in the world’s markets. Yet any faster growth of imports is still impeded both by the low income level and insecurity regarding future income as evidenced by, e.g., increasing bank deposits by households and businesses.

In the year as a whole the balance of payments surplus will be determined by export increases which will also promote the creation of new vacancies. Investment and the related import growth this year can be impeded by uncertainty regarding government decisions before the parliament elections scheduled this autumn.