According to provisional estimations, GDP was affected by an output rise in the production sector of 3.7 %. In the services sectors there was a drop of 3.2 %
Compared to the 3rd quarter of 2020, GDP increased by 1.1 % (according to seasonally and calendar adjusted data).
The full figures for the quarter, which are subject to revision, will be published on 26 February. However, if the estimate proves accurate, it would mean Latvian GDP contracted by around 3.5% in 2020, with many analysts having predicted a 4% contraction.
Nevertheless the Finance Ministry attempted to put a positive spin on the figures, describing them as "better than expected".
"The economic downturn in the fourth quarter was only 1.4%," the Finance Ministry said, adding:
"As in previous quarters, the spread of Covid-19 has hit the services sector much harder, with overall volumes down 3.2% year-on-year. In the manufacturing sector, on the other hand, growth in the fourth quarter was already quite strong at 3.7%, which was ensured by both stable development of the manufacturing industry and good grain yields and growth in the forestry and logging sector. The construction sector, where output was already high throughout 2020, is also likely to grow in the fourth quarter. According to the budget execution indicators, public investment expenditure increased quite significantly in the fourth quarter of last year, which also had a positive impact on the development of the construction sector."
Swedbank gave some support to the fairly upbeat assessment, saying:
"Despite the announced emergency situation and the increasingly restrictive measures imposed by the government, the GDP in the fourth quarter saw an increase with respect to the previous quarter. The impressive result is thanks to the producing sectors, which managed to increase their output by 3.7%. The goods exports data were already suggesting strong performance. The services sectors exhibited a 3.2% drop and were a notable drag on the economy. The data on output in services sectors showed a marked fall in accommodation and catering as well as transport sector; however, the fall was less pronounced than in spring. Q1 of 2021 so far looks likely to show negative growth. Economy will start to recover as summer approaches, with the overall growth in 2021 forecast at 2.8%."
