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Latvia's GDP fell by 3.6% in 2020

Data published February 26 by the Central Statistical Bureau (CSB) show that in 2020, as compared to 2019, Gross Domestic Product (GDP) reduced by 3.6%: a drop somewhat lower than many people expected.

In 2020, GDP at current prices amounted to EUR 29.3 billion.

Compared to the fourth quarter of 2019, in the fourth quarter of 2020 GDP reduced by 1.5 % (according to seasonally and calendar non-adjusted data). Compared to the third quarter, GDP at constant prices increased by 1.1 % (according to seasonally and calendar adjusted data).

In 2020 GDP at current prices comprised EUR 29 334.0 million EUR

In 2020 GDP at current prices

During 2020 retail trade increased by 1.5 %, of which trade in food products – by 3.6 %, but trade in non-food products – reduced by 2.4 %. Wholesale trade, retail trade and repair of motor vehicles and motorcycles reduced by 12.2 %, but wholesale trade – by 3.0 %.

Significant drop in transport and storage sector of 14.9 % was promoted by fall in passenger traffic of 53.3 %, warehousing and support activities for transportation of 9.6 %, freight transport of 3.3 %, but there was an increase in postal and courier activities of 0.1 %.

One of sectors affected the most by COVID-19 crisis in 2020 was accommodation and food services sector (drop of 38.1 %). Restrictions imposed on travelling and movement for reduction of consequences of pandemic significantly affected development of accommodation sector (reduction of 53.0 %), in turn, gradually tightening limits on gathering and epidemiological requirements for provision of services, volume of catering sector reduced by 32.6 % during a year.

In 2020, financial and insurance activities fell by 5.7 %, which was because of the decline in financial service activities of 15.9 %.

Due to restrictions determined in the country to prevent the spread of infection, another one of services sectors that was hit the hardest by COVID-19 pandemic was arts, entertainment and recreation, where the drop against the corresponding period of the previous year reached 26.6 %. The largest decrease was in gambling and betting activities (of 40.6 %), but significant reduction was also registered in sports activities, amusement and recreation activities and creative and arts activities.

In 2020 the volume of taxes on products (mainly value added tax, excise and customs taxes) decreased by 4.6 %.

GDP changes in the fourth quarter of 2020 and 2020 by kind of activity
(as % compared to the corresponding period of the previous year or previous year)

GDP

In 2020, compared to the previous year, total household expenditure fell by 10.3 %. It was mainly affected by the spread of COVID-19 virus in society, which started at the end of first quarter. Restrictive measures taken by the government significantly affected expenditure of households in several consumption groups, of which in two out of traditionally largest expenditure groups: transport (public transport, purchase and exploitation of transport vehicle) and recreation and culture. Expenditure in these final consumption groups reduced by 13.7 % and 51.4 %, respectively. Affected by the pandemic, households also spent 39.6 % less on accommodation and catering services. Due to limitations imposed by the government on provision of catering services, part of households prepared meals at home, which contributed to increase of household expenditure on purchase of food products by 3.4 %. Household expenditure on housing rose by 0.9 %.

Government final consumption expenditure grew by 2.6 %.

Exports of goods and services decreased by 2.7 %. Exports of goods rose by 5.5 %, reaching the highest exports value so far. Last year main commodities in exports of Latvia were wood, articles of wood and wood charcoal; electrical machinery and equipment; machinery and mechanical appliances. COVID-19 pandemic left negative impact on exports of services, which reduced by 21.3 %. The drop was registered also in exports of transport and tourism services, but exports of other economic activity (R&D services, professional and management consulting services, technical, trade-related and other business services) and computer services increased.

Imports of goods and services decreased by 3.3 %. Total imports of goods remained at the level of 2019, while imports of services reduced by 19.0 %.

GDP changes in the fourth quarter of 2020 and 2020 by kind of expenditure
(as % compared to the corresponding period of the previous year or previous year)

GDP

Compared to 2019, in 2020 compensation of employees grew by 1.5 %, of which total wages and salaries – by 1.9 %, but employers' social security contributions remained at the level of 2019. The largest growth in total compensation of employees was in information and communication services sector – by 10.4 %, but in the group of wholesale trade, retail trade and repair of motor vehicles and motorcycles, transport and storage and accommodation and food services sectors it has reduced by 5.6 %. Gross operating surplus and mixed income decreased by 9.7 %, whereas the balance of taxes on production and imports and subsidies went down by 4.9 %.

Total wages and salaries and changes thereof

wages

 

More information on GDP is available in the OSP section Economy “Gross domestic product – quarterly data” and “Gross domestic product and value added – annual data”.

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