01.09.2021 - Economy

Latvia saw double-digit GDP growth in Q2

Fresh data from the Central Statistical Bureau (CSB) released August 31 provides further evidence of an economic revival in Latvia. In the 1st quarter of 2021, compared to the 2nd quarter of 2020, gross domestic product (GDP) rose by 11.1 % (according to seasonally and calendar non-adjusted data at constant prices).

Quarterly GDP at current prices was EUR 8.1 billion. As compared to the previous quarter, GDP went up by 4.4 % (according to seasonally and calendar adjusted data at constant prices).

The CSB said an improvement in the Covid-19 situation was behind many of the rallies by different sectors of the economy.

As the restrictions for the limitation of spread of COVID-19 infection were mitigated, in the 2nd quarter of 2021 trade sub-sectors rose significantly – in trade and repair of motor vehicles and motorcycles there was an increase of 58.5 %, in wholesale trade – of 12.9 %. In retail trade increase (of 8.9 %) was promoted by rise in retail sale of food products by 1.5 % and rise in retail sale of non-food products by 13.6 %.

As restrictions on movement and economic activity reduced, growth in transport and storage sector (of 17.0 %) was positively affected by land and pipeline transport – by 16.5 %, air transport – by 215.9 %, warehousing and support activities for transportation – by 13.0 %, postal and courier activities – by 24.6 %. In turn, development of transport and storage sector was affected negatively by water transport sector – a drop of 12.2 %.

"Reduction of travelling and movement restrictions promoted positive development of accommodation and food service activities sectors – rise of 42.5 %, of which accommodation – by 117.9 %, provision of food service activities – by 30.2 %," the CSB said.

Compared to earlier GDP flash estimate for the quarter, the latest information both on assessment of total value added of sectors and on taxes on products concerning the period affected the overall estimate positively. Each of these components enlarged GDP by 0.4 percentage points.

Wages were up, too. Compared to the 2nd quarter of 2020, in the 2nd quarter of 2021 compensation of employees at current prices increased by 13.6 %, of which total wages and salaries – by 14.2 %, but employers' social security contributions – by 10.4 %.

The sharpest increase in compensation of employees was registered in the group of public administration and defence; compulsory social security, education, human health and social work activities – by 20.3 %, where rise in compensation of employees in human health and social work activities had the greatest impact.

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