Latvian economy contracted a provisional 1.4 % in first quarter of 2020

The latest flash estimate from the Central Statistical Bureau (CSB) shows that in the 1st quarter of 2020, compared to the 1st quarter of 2019, gross domestic product (GDP) value decreased by 1.4 % (according to seasonally and calendar non-adjusted data) as the onset of the coronavirus crisis sent the economy into reverse.

Compared to the 4th quarter of 2019, GDP fell by 2.9 % (according to seasonally and calendar adjusted data).

"[The] COVID-19 crisis in time-series analysis area at the moment are considered as an occurrence that is not seasonal... when carrying out seasonal adjustment, the impact of the crisis is not excluded from the data," the CSB explained.

However, the statistical office also warned that due to the extraordinary nature of current events, caution should be exercised when interpreting flash estimates.

"It must be taken into account that during the crisis both unadjusted and seasonally and calendar adjusted data may be potentially exposed to greater data revisions than they were in a period before the crisis," it advised..

The precise value of and changes in GDP in the 1st quarter of 2020 will be published on 29 May.

Commenting on the data, Swedbank said "the worst is yet to come."

"The bulk of COVID-19 impact is to come in Q2 with several indicators pointing to a sharp decline in activity," Swedbank said.

"Economic sentiment dropped in March and plummeted in April, but the level so far is still above that seen in 2009. Sharpest drop was experienced by retail trade and services – sectors directly hurt by the imposed measures. Manufacturing and construction are faring better. However, Q2 manufacturing export expectations have dropped to an alltime low, suggesting that the hit in Q2 will be substantial also for manufacturing," Swedbank added.

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