A small surplus in the current account in December

For a second consecutive month, a small surplus (1.3 mil. lats) formed in the Latvian balance of payments current account in December. Month-on-month, the surplus dropped because of the increased goods external trade deficit as the increase was only partially compensated by the increase in the positive balance of services trade.

Both goods exports and imports dropped month-on-month in December. The total negative balance of goods external trade increased to 125.2 mil. lats, without exceeding, however, its monthly average. The positive balance of services external trade meanwhile increased to 86.3 mil. lats as a result of the increased value of transportation, financial, information and computer services granted to foreigners.

The profits made by foreign investor businesses dropped slightly compared to previous months and was smaller than the positive balance formed of compensation of employees and thus in December there was a small surplus (1.9 mil. lats) in the incomeaccount.

The positive balance of the current transfers account did not change substantially in December and was at 38.3 mil. lats. 110.5 mil. lats was received from European funds in December  (including 35.2 mil. lats from the European Social Fund and 35.3 mil. lats from the Cohesion Fund).

A small negative balance (26.5 mil. lats) in December formed in the financial account. Foreign direct investment in Latvia grew by 74.2 mil. lats. According to monthly data, foreign direct investment in Latvia in the fourth quarter grew quarter-on-quarter and was at 4.5% of the predicted gross domestic product (GDP). The year-end balance-of-payments statistics also reflect the repayment of the balance of the loan from the International Monetary Fund and the emission of securities in the international financial markets.

Operational data indicate that in 2012 overall, the current account deficit was smaller than a year ago (273.5 mil. lats or 1.8% of predicted GDP). The drop in the current account deficit in 2012 was impacted by the rapid growth in goods exports as well as the development of services (in transportation sector in particular).