Exports and imports grow annually, monthly changes negligible
In June 2012, the external trade turnover dropped by 0.8% or 9.4 mil. lats month-on-month. With exports dropping by 2.5% and imports growing 0.7% month-on-month, the goods trade balance deteriorated slightly month-on-month and the imports excess over exports reached 169.3 mil. lats in June.
The annual growth rate of export values of goods remained positive (+9.6%). A substantial annual growth in exports was observed in such groups of goods as products of the food industry, base metals as well as mechanisms and mechanical devices, whereas the exports of mineral products, transportation vehicles and products of the chemical industry dropped. The operational monthly data on the second quarter point to the fact that, compared to the first quarter of the year, export growth has taken place both in the main and small groups of goods and thus the structure of Latvian export goods has become more diversified.
The annual growth of goods import value reached 15.0%. Year-on-year, substantial growth was observed in the imports of mechanisms and mechanical appliances, base metals and mineral products evidencing the high demand for raw materials for the production of exports and goods for the local market as well as investment goods. That is a reflection of the structure of Latvian GDP growth where exports still have a substantial growth, with the significance of investment also on the rise.
It can be expected that a rise in resource prices in July and August will promote a rise in goods import values. As the Latvian exporters look for new market niches under the circumstances of a weaker external demand, they are likely to experience the development of small export branches seen at the beginning of the year. The growth of foreign direct investment will also contribute positively to export growth. Data on the first months of this year indicate that the inflow of foreign direct investment in Latvia has been substantial, including industry, which promises a rise in the export potential as well. Overall, export growth is likely to slow down gradually, driven by the limited external demand. The competitiveness improved during the crisis, however, will allow Latvian exporters to maintain relatively better positions than competitions and, against the background of other countries, Latvian export growth will continue to be relatively rapid.