Week in the Economy is assessed by Vilnis Purviņš,
Deputy Head of Macroeconomic Analysis Division,
Monetary Policy Department,
Bank of Latvia

08.03.-14.03.2010

1. The GDP decreasing rate slows down
   The year-on-year drop in GDP in the fourth quarter of 2009, at 16.9%, was smaller than in the preceding three quarters.
   more
   
   
2. Consumer price level continues to drop
   Even though the average consumer price level in February was the same as in January, the annual deflation has reached 4.2%.
   more
   
   
3. The Bank of Latvia lowers interest rates
   Taking into account the stabilizing of the economic situation and the limited inflation risk, the Bank of Latvia Council has lowered the Bank of Latvia’s refinancing rate by 0.5 percentage points (to 3.5%) as of March 24. At the same time, the interest rate on the bank marginal deposit facility has been lowered to 0.5%.
   more
   
   
4. Unemployment rate slows
   The unemployment level in February grew by 0.5 percentage points (the least increase since August of 2009), reaching 17.1% of the economically active population.
   more
   
   
5. Increase in the energy sector improves industrial indicators in January
   The demand for energy products in January resulted in a substantial production growth in electrical energy and supply of gas, thus providing a 5.7% year-on-year increase in industrial production.
   
   
6. Exports and foreign trade balance indicators improve
   Latvian exports of goods in January exceeded the indicator a year ago by 4.7%, and the foreign trade deficit has shrunk twofold.
   more
   

01.03.-07.03.2010

1. Wages continue to drop
   According to the Central Statistics Agency data, in the fourth quarter of 2009 the average gross monthly wages was 3.5% lower than in the third quarter and 12.1% lower year-on-year.
   more
   
   
2. Current account surplus in the balance of payments on the rise
   According to operational data, in the fourth quarter of 2009 the surplus in the balance of payments current account reached 12% of GDP; moreover, the goods and services total balance was also positive.
   more
   
   
3. World Bank continues its support to Latvia
   The World Bank has resolved to continue with its support to Latvia by granting it the second part of the loan in the amount of 100 million euro.
   

22.02.-28.02.2010

1. Drop in the retail turnover slowed substantially
   The annual rate of falling retail turnover slowed approximately twofold in January (to 16.0%). According to seasonally adjusted data, the January retail turnover exceeded that of December 2009 by 4.0%.
   more
   
   
2. Supplemental Memorandum of Understanding with the EU published
   The Ministry of Finance has published the signed Supplemental Memorandum between the EU and Latvia, which envisions Latvia continuing to adhere to a strict fiscal policy and carry out structural reforms to resume economic growth.
   
   
3. Values of foreign trade units reduced in 2009
   In 2009, the average value of an export unit contracted by 9.9% and the average value of an import unit by 6.4%. Both values dropped in the 4th quarter year-on-year, but rose over the 3rd quarter of 2009.
   

15.02.-21.02.2010

1. IMF extends further support to Latvia
   The Executive Board of the International Monetary Fund (IMF) is granting to Latvia another loan tranche worth 200.0 million euro following the review of the country's fulfilment of a crisis management programme.
   
   
2. Surplus in the general government consolidated budget in January
   In January, the surplus of the general government consolidated budget totalled 70.7 million lats, with the budget revenue outweighing expenditure.
   
   
3. Producer prices increase
   In line with the rising sales prices in the export markets, Latvia's industrial producer prices grew by 0.8% in January, nevertheless reporting a year-on-year decline of 6.6%.
   

08.02.-14.02.2010

1. GDP fall has moderated somewhat
   According to the flash estimate of the Central Statistical Bureau of Latvia, GDP recorded a year-on-year fall of 17.7% in the fourth quarter of 2009.
   
   
2. Outlook for Latvia's credit rating upgraded
   The rating agency Standard & Poor's has revised upward, from negative to stable, the outlook for Latvia's credit rating.
   
   
3. Annual consumer price deflation accelerates
   Despite a 0.2% increase in average consumer price level in January, the annual deflation has already reached 3.1%.
   
   
4. Exports resume growth
   In December 2009, exports expanded by 4.4% year-on-year, while imports accounted for a 27.0% drop; hence Latvia's foreign trade deficit remained low and a surplus of the current account of the balance of payments was recorded.
   

01.02.-07.02.2010

1. EC approves supplementary memorandum of understanding
   The Economic and Financial Committee of the European Commission approved a supplementary memorandum of understanding that will allow Latvia to receive the next instalment of the international loan in the amount of 500 million euro.
   
   
2. Industrial production volumes continue to contract moderately
   In December industrial production volumes decreased over November by 4.2% and, year-on-year, by 3.6%. In 2009 overall, production dropped 15.8%.
   
   
3. Surplus in the state budget in January
   According to the provisional data of the State Treasury, in January there was a surplus of 61.9 million lats in the state consolidated budget.
   

25.01.-31.01.2010

1. EC assessing positively Latvia's fiscal policy
   The European Commission has assessed as effective the action of the Latvian authorities to implement expenditure cuts and to correct the excessive budget deficit.
   
   
2. Retail trade turnover continues on a downward trend
   The situation in retail trade has remained broadly unchanged also in December, with the turnover dropping 1.9% month-on-month and 30.2% year-on-year. For the year 2009 as a whole, the retail trade turnover has recorded similar contractions (-28.0%).
   more
   

18.01.-24.01.2010

1. Saeima endorsed the draft law on borrowing
   Saeima (the Latvian Parliament) has officially endorsed the Cabinet of Ministers' mandate to borrow from international lenders.
   
   
2. Budget deficit in 2009 stood at 6.8% of GDP
   Recording a pickup of 304.0 million lats in December, the general government consolidated budget deficit of 2009 has amounted to 892.1 million lats or around 6.8% of GDP.
   
   
3. Producer prices were up in December
   Producer prices in Latvian industry increased by 0.4% in December; for 2009 overall, however, an 8.0% drop has been recorded.
   more
   

11.01.-17.01.2010

1. The trend toward reduced consumer prices is continuing
   With consumer prices falling by 0.5% in December 2009, the annual deflation has amounted to -1.2%, and average annual inflation has decreased to 3.5%.
   more
   
   
2. Latvian exports in November have reached the level of the previous year; the current account posts a surplus
   After a lengthy period of decreasing, Latvian exports of goods in November reached the level posted in November of the previous year, whereas imports were 26.5% lower than a year ago. With goods and services exports exceeding imports and scheduled transfers increasing in volume, a surplus of 131.9 million lats has appeared in the current account of the Latvian balance of services.
   more
   
   
3. The rate of increase in unemployment slows down somewhat
   The level of unemployment in Latvia rose somewhat less than in November, i.e. by 0.9 percentage points, affecting 16.0% of the economically active population by the end of 2009.
   more
   

04.01.-10.01.2010

1. Industrial production up
   In November 2009 industrial production output exceeded that in October by 8.7%, and thus the November output lags behind the output indicator for the relevant period a year ago only by 2.4%.
   more
   
   
2. Last year's budget deficit smaller than planned
   According to provisional data, the state budget deficit in 2009, calculated according to the money flow principle, was 6.6% of GDP i.e. lower than the predicted 8% of GDP.
   
   
3. Withheld pensions to be paid in April
   After reaching a provisional agreement with the international lenders, it has been decided that pensioners will receive their pensions in full as of February and the previously withheld part of the pensions will be paid back, in one payment, in April.