Latvia Slips Into Recession for First Time in Six Yearsby
GDP contracts 0.1% q/q in 1Q after dropping 0.4% in 4Q
Exports, manufacturing and consumption all weigh on economy
Latvia’s economy slipped into recession for the first time in six years as declining production at the Baltic nation’s only steelmaker curbed manufacturing and exporters struggled to find new markets.
First-quarter gross domestic product fell a seasonally adjusted 0.1 percent from the previous three months after a revised 0.4 percent decline between October and December, the statistics office said Friday by e-mail. GDP rose 1.8 percent from the same period a year ago.
Slower growth in Latvia’s main trading partners and a recession in neighboring Russia are weighing on the euro member’s economy, while operations have been almost halted at the steel plant AS Liepajas Metalurgs. With retail sales already rising at the slowest pace in five years, the central bank in March cut its GDP-expansion forecast to 2.3 percent from 2.7 percent, citing weak investment and exports.
“The situation isn’t great and we didn’t expect this bad result,” said Rokas Grajauskas, chief Baltic economist at Danske Bank A/S. “Yet annual growth is still strong and should help Latvia avoid a recession over the full year.”