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Bank of Latvia

12.03.2010

Artūrs Kaņepājs, Bank of Latvia Economics Expert

The annual growth in exports already observed last December grew slightly in January reaching 4.7%. That resulted from the previously observed upward trend in total exports, the positive indicators in some product groups as well as the base effect. The export decrease against December was primarily determined by seasonal factors.

The annual decrease in goods imports was 13.1% in January and the goods sales negative balance was 76.8 million lats, i.e. almost two times less than in January one year ago.

The large annual increases in the sales of mineral products and exports of wood products was effected by a greater demand for fuel. The closing of the Ignalina nuclear power plant also had an increasing effect on mineral product sales: Lithuania's demand for electrical power has grown substantially. The trade volumes were substantially affected by grain exports, which, to a great extent, were counterbalanced by grain imports.

The greatest decreasing effect on exports was exerted by mechanisms and electrical appliances, metals, and vehicles. In December, however, there was a rapid improvement in annual increase, which might indicate a redistribution of exports from one month to the next and it may be premature to consider these changes a lasting trend.

In the fourth quarter of 2009 Latvia's share in the export markets of the European Union and Russia continued to grow. Moreover, the data of the EC entrepreneur survey, the assessment of the volumes of production, new orders and expected changes in employment in the processing industry continued to improve in January and February. The recent dynamics of the Latvian export market shares and confidence indicators suggest that in the coming quarters export volumes and the role of exports in the structure of the economy will continue to grow under the influence of better competitiveness and growing foreign demand.