A surplus in Latvia’s current account in November

A surplus of 53.6 mil. lats formed in Latvia’s current account in November 2012 as Latvian export growth exceeded that of imports and the amount of funding from the European Union (EU) increased and the income of foreign direct investors dropped slightly.

The goods external trade deficit continued to shrink in November. Eurostat data on the first eleven months of 2012 indicate that Latvia has maintained the fastest growth in goods exports (16%) among EU countries. The nominal annual growth in goods and services exports reached 16.9%, in November and the annual growth in imports was 7.7%.

As the value of services both received and granted dropped, the services external trade balance did not change substantially. In November the value of air transport services granted dropped but the value of those received increased. The value of road transport services did not change substantially and could grow in 2013 as agreements have been reached with several countries (Russia, Georgia and Uzbekistan) on increasing the transport quotas that are a limiting factor in this sector.

The positive balance in the capital account dropped slightly in November (to 28.1 mil. lats), but the positive balance of the current transfers account  (40.1 mil. lats) was close to the monthly average of this account. 53.7 mil. lats was received from EU funds in November (including 19.3 mil. lats in subsidies for products).

Direct investment increased by 51.3 mil. lats. The international rating agencies Standard&Poor's and Fitch Ratings raised Latvia’s credit rating one notch and therefore positive trends in the flows of direct investment are expected in 2013 as well.

Even though there was a surplus in the current account in November it is expected that a small deficit will have formed for 2012 overall (the 11-month data indicate that the deficit was smaller than a year ago).