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According to the rapid assessment of Gross Domestic Product (GDP) by the Central Statistical Bureau, in the third quarter of this year, GDP at comparable prices, based on unadjusted data, was 0.1% lower than the same period last year. The decrease in GDP in the third quarter was mainly influenced by contractions in the manufacturing sectors.
In the service sectors, output volumes remained practically at the same level as in the third quarter of the previous year, while product tax revenues increased in the third quarter.
Detailed data for the third quarter will be available in a month. However, it can already be observed that the economic trends seen in the first half of this year continued in the third quarter. Weaker performance in the manufacturing sectors in the third quarter was expected due to the unfavorable external environment affecting Latvia's export market.
Overall, in July-August this year, commodity exports at actual prices were 20% lower than a year ago, mainly due to a decline in producer prices. In July-August this year, output volumes in the manufacturing sector decreased by 6.2%. However, trends in sub-sectors vary significantly, with growth observed in the production of computers, electronic and optical equipment, the chemical industry, and food production, while there was a decline in the production of non-metallic mineral products, wood processing, furniture production, metalworking, and light industry. Additionally, adverse weather conditions have affected the decline in the agricultural sector and mining industry.
In the previous months, when the increase in consumer prices exceeded income growth, real incomes of residents decreased, negatively affecting household consumption. In the third quarter of this year, retail trade volumes were 3.7% lower than in the same period last year, indicating weak household consumption.
Considering that overall economic activity in the third quarter remained practically unchanged compared to the same period of the previous year, it can be concluded that positive trends persisted in the construction and investment sectors, as well as in most service sectors, with output volumes in the third quarter of this year increasing year-on-year.
The Ministry of Economics forecasts that significant changes in the economy are not expected in the remaining months of the year, and overall, in 2023, GDP will remain close to the levels of 2022.