In the first quarter of 2017, the GDP at current prices was €5.871 billion. The seasonally and working-day adjusted quarter-on-quarter growth in this period was 1.6% at constant prices and 4% on year.
GDP changes in first quarter of 2017 by sector
In the 1st quarter of 2017, as compared to the 1st quarter of 2016, the manufacturing section grew by 10%. Industry had the largest positive impact on Latvia's GDP.
Growth was recorded in almost all manufacturing divisions, the largest of which are: manufacture of wood and of products of wood – growth of 5 %, manufacture of food products – of 2%, manufacture of fabricated metal products – of 14%.
Significant growth was also experienced in manufacture of computer, electronic and optical products – of 37%, in manufacture of furniture – of 14% and in manufacture of chemicals and chemical products – of 13%.
There was an 18% increase in the production volumes of mining and quarrying, as well as an 11% increase in electricity, gas, steam and air conditioning supply.
As compared to the corresponding quarter of the previous year, the construction production volume increased by 8% in the 1st quarter of 2017.
Growth was experienced in all construction divisions.
There was an increase of 19% in the construction of residential buildings and of 7% in the construction of non-residential buildings, of which there was a 20% upturn in the construction of industrial buildings and warehouses and a 4% rise in the construction of civil engineering structures, including an increase in the construction of harbors and dams (of 48%) and a drop in the construction of highways, streets and roads, airfield runways, and railways (of 24%).
Retail trade experienced growth of 3% in the 1st quarter of 2017, of which retail trade in non-food products increased by 6%, whereas retail trade in food products decreased by 2%. Wholesale increased by 2% during the respective period, while wholesale, retail trade and repair of motor vehicles and motorcycles grew by 24%.
The transportation and storage section experienced growth of 9%, which was facilitated by a 4% increase in passenger traffic, an increase of 8% in freight traffic, as well as an 11% increase in warehousing and support activities for transportation.
Growth of 4% was recorded in accommodation and food service activities, of which 2% in accommodation services and 5% in food services.
Growth of consumer and business prices caused relatively low growth rates in several service sections.
An 11% drop in the section of financial and insurance activities was caused by growth in the proportion of expenditures of the banking division, as well as a 50% drop in the profit from commercial transactions with financial instruments.
The volume of taxes on products (value added tax, excise and customs taxes) increased by 2% in the 1st quarter of 2017, as compared to the 1st quarter of 2016.
Latvia records steepest GDP growth since 2012
Swedbank chief economist Mārtiņš Kazāks said that the GDP growth is the steepest since 2012 with an increase recorded in almost all industries except finance and insurance where the fall might be accounted for by the decrease in the non-resident sector.
The export sector is the chief driving force with manufacture recording a fantastic 10.3% growth and the transportation and storage section seeings 9.4% growth with Russian freight hitting the sector less than expected.
Increasing income is prompting households to spend more on art, entertainment and leisure (8.1%). Capital investments are picking up again (8.8%) and construction has seen 8.4% growth, encompassing almost all aspects of the industry, the economist noted.
Both investments and construction are expected to pick up even more with the influx of EU funds.
"The economy makes one happy early this year - there's growth wherever you look! And growth unprecedented in the last few years," said Kazāks.
Faster growth and falling unemployment will drive wages up (up to 7% or more), prompting residents to spend more.
"The economy is growing. The growth is all-encompassing and, provided there are no negative global turns and the state doesn't mess up the tax policy, we can expect the economy to pick up more than the forecast 3%," he said.