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Latvia’s Current-Account Surplus Narrowed in Third Quarter

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Dec. 3 (Bloomberg) -- Latvia’s current-account surplus narrowed to about 1 percent of gross domestic product in the third quarter as imports rose because of the economic recovery.

The surplus totaled 37 million lati ($69.2 million), compared with 288.9 million lati, or 9 percent of GDP, in the third quarter a year ago, the Riga-based central bank said in an e-mailed statement today. The current account had a surplus of 5.8 percent of economic output in the second quarter.

The Baltic country’s current account, which had a deficit of 27.1 percent of GDP in the fourth quarter of 2006, has been in surplus since the beginning of last year after wage cuts and the European Union’s deepest economic contraction stifled imports and company profits. The economy grew an annual 2.7 percent in the third quarter, the first increase in 2 years, as manufacturing and exports advance.

“With the economic activity in Latvia expanding -- production and exports growing -- the need for imports of intermediate goods and capital goods, particularly so of metals, minerals and transport vehicles, also increased,” central bank spokesman Martins Gravitis said in the statement.

The current-account gap for 2006 and 2007 was 22.5 percent of GDP, the EU’s widest, during the height of the country’s economic boom.

To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net

To contact the editor responsible for this story: Willy Morris at wmorris@bloomberg.net

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