In September 2011, the current account remained close to balanced

September 2011, the current account surplus was 1.1 mil. lats. The current account balance was also positively affected by the changes in the income account. The goods and services trade negative balance, which increased by 8.6 mil. lats month-on-month, was primarily affected by the rise in services imports with a simultaneous slight drop in services exports. The goods trade negative balance did not change substantially. Net inflows were registered in the financial account whose balance reached 24.6 mil. lats.

The month by month data indicate that a significant negative contribution to the current account balance was made by large scale investment goods purchases by some enterprises (i.e. imports) in June and July, yet in 2011 overall the current account could remain close to balanced.

A more thorough uptake of the EU structural funds in 2012 could promote imports of goods and have a negative impact on the trade balance, yet it will mostly concern capital goods and intermediate consumption goods. A slowdown in the global economy by contrast will both impede the growth of Latvian goods exports and consequently produce a very moderate growth in income which in turn will not foster substantial imports of consumer goods.

Services trading will likewise be impacted by opposing factors: on the one hand, the short lived optimism evident in the cargo shipments by sea index Baltic Dry has abated and indicates that expanding production capacities is not topical. At the same time, a positive, if one-off, contribution in the net exports of goods and services in 2012 overall can be predicted from the news about the major role the Riga shipyards will play in providing a floating drilling platform in Ukraine.

An economic slowdown in Latvia will impede an increase in the negative balance in the income account and the current account is likely to remain close to balanced in 2012 as well. 

Latvia's balance of payments (data)

APA: Paula, D. (2022, 28. may.). In September 2011, the current account remained close to balanced. Taken from https://www.macroeconomics.lv/node/2280
MLA: Paula, Daina. "In September 2011, the current account remained close to balanced" www.macroeconomics.lv. Tīmeklis. 28.05.2022. <https://www.macroeconomics.lv/node/2280>.

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