According to a preliminary assessment by the Central Statistical Bureau in the third quarter of this year, the gross domestic product (GDP) of Latvia grew by just 0.8% if compared to the third quarter of the last year.
The growth is surprisingly sluggish, much lower than it was expected by the majority of economists, including representatives of the Ministry of Finance and the Ministry of Economy. Particularly, against the background of the results of the preceding quarter, when the GDP growth exceeded 2%.
The preliminary data show that the decline increased in civil engineering, where the annual fall reached 24%. Such decline is already comparable with the severest in contemporary history of Latvia crisis of 2008-2010.
In return, the sphere of industry and services continue a slow growth — by 2% and by 1%, accordingly.
Retail trade is not particularly encouraging – although sales continue growing such growth is getting slower and slower. Therefore, most likely, the growth rates in consumption decelerated as well. It looks like that investment flow continues slowing down.
Inexpressive growth of GDP points to caution on the part of households and on the part of enterprises as well. Caution, in its turn, is caused by uncertainty in Latvian economy and /or depression of the private sector. Sometimes business behaviour is even excessively negative, unsubstantiated by actual state of things in economy.
In some degree, the pessimism of undertakers is caused by sometimes awkward actions of the government. What good is never ceasing scandals in long-drawn process of searching for suitable candidates for key positions in State administration, such as director general of the State Revenue Services and head of the Corruption Prevention and Combating Bureau. Reforms in medicine and education are not encouraging, which, in general, are conducted in the right direction, but oftentimes misrepresented to public.
Moreover, the fact that tax levies into cumulative budget are collected according to plans evidences that the state of affairs in economy are not so bad. Although the plan was elaborated based on much higher GDP. In general, taxes were collected by 4% more than for the same period a year ago.
In consideration of the preliminary assessment of GDP, the general forecast for 2016 declined to the level lower than 2%. There are more pessimistic assessments – in the Bank of Latvia, for instance, they assume that this year the growth of Latvian economy at the seasonally adjusted prices might be even lower than 1.4%. For comparison: early in the year it was planned to achieve the GDP growth of 3%.