Growing competitiveness and foreign demand increase the processing industry volume in March

The production volume of the Latvian processing industry in March increased 12.2% over February (according to seasonally adjusted data). The factors that promote the development of processing industry include an ever more determined Latvian industry's reorienting itself to export and a gradual rise in economic activity in our trade partners. The annual rise in processing industry production (excluding the influence of the number of working days) has also been substantial: 11.1%.

Notable growth was observed in several branches, particularly in the manufacturing of computers, electronics and optical equipment, electrical equipment, non-metal mineral products, beverages, textile products, apparel, and wood pulp products as well as in the mechanical engineering sector.

The results of entrepreneur surveys indicate that growth in the above branches was determined by rises both in export orders and competitiveness of production. The indicator of the competitiveness of Latvian production in the European Union markets in the first quarter of this year was positive for the first time in two years, with its annual growth reaching 14 percentage points.

The rise in the competitiveness of Latvian products provides the opportunity for the local producers in several branches to increase their domestic market as well, gradually replacing imported products. This is supported by the latest data on the rise in domestic turnover in such branches as beverage, textile, foodstuff, chemical, computer, electronic and optical equipment and furniture manufacturing.

The weak domestic demand and the limited availability financial resources will obstruct the development of production in the next few months as well. Moreover, risks of expected slower growth in the foreign markets, particularly in the euro zone, are on the rise. Both in March and April, however, the entrepreneur assessment of the situation as expected in one month has improved substantially. That may indicate a growing confidence of entrepreneurs in the stability of the markets for their products.