In the 2nd quarter, GDP has dropped by 0.5 %

Data compiled by the Central Statistical Bureau (CSB) shows that in the 2nd quarter of 2023, compared to the 2nd quarter of 2022, gross domestic product (GDP) reduced by 0.5 % (according to seasonally and calendar non-adjusted data at constant prices). As compared to the previous quarter, GDP went down by 0.3 % (according to seasonally and calendar adjusted data at constant prices).

In the 2nd quarter GDP at current prices was EUR 10.2 billion.

Data compiled by the Central Statistical Bureau (CSB) show that in the first half of 2023, as compared to the same period of 2022, gross domestic product (GDP) increased by 0.1 %. GDP at current prices amounted to EUR 19.3 billion.

In the 2nd quarter of 2023 GDP at current prices comprised EUR 10 172.0 million

Production approach

(at constant prices, seasonally and calendar non-adjusted data)

In the 2nd quarter of 2023, as compared to the corresponding period of the previous year, as services sectors rose by 1.4 %, but producing sectors fell by 3.8 %, total value added has remained at the level of the previous year.

A drop in agriculture sector was estimated at 9.3 %, which was affected by crop production assessment (drop of 13.0 %) and reduction in livestock production (of 1.9 %). Increase was observed in fishery (of 12.9 %), but drop in forestry and logging sector (3.3 %).

A prolonged period of reductions (for the fourth consequent quarter) was observed in manufacturing – by 7.9 %. It was significantly affected by a reduction in the largest manufacturing sector – manufacture of wood and of products of wood by 13.2 % (mainly in sawmilling and planing of wood; impregnation). Different trends can be observed in other important manufacturing sectors – increases in manufacture of food products (of 1.9%), manufacture of electrical equipment (8.4 %) and manufacture of computer, electronic and optical products (23.8 %). While a decrease is observed in manufacture of other non-metallic mineral products (of 19.3 %), manufacture of rubber and plastic products (14.9 %) and manufacture of fabricated metal products (6.9 %).

A drop in other industry (of 5.5 %) was affected by reduction in electricity, gas, steam and air conditioning supply (4.8 %) and mining and quarrying (13.0 %). In turn, there was an increase in water supply; sewerage, waste management and remediation activities (of 4.2 %).

The largest positive impact on total economic development was provided by a significant rise in construction sector (of 15.4 %). Increase was observed in all three construction sub-sectors: construction of buildings rose by 21.7 %, work carried out in civil engineering – by 0.9 % and specialized construction work carried out – by 21.1 %.

There was a drop in trade of 1.6 %, which was affected by a fall in wholesale trade of 5.6 %. A decrease in retail trade (of 2.9 %) was promoted by the drop in retail sale of food products and retail sale of non-food products – by 5.5 % and 1.4 %, respectively. Positive trends are still observed in trade and repair of motor vehicles and motorcycles – an upturn of 18.4 %.

Fall in transport and storage sector (of 4.9%) was negatively affected by a drop of 7.7 % in land and pipeline transport activity and 3.7 % in warehousing and support activities for transportation. In turn positive contribution to the development of transportation and storage sector was reached by rise in air transport (of 24.6 %), water transport activity (4.0 %) and in postal and courier activities (2.0 %).

Positive development in accommodation and food service activities sector was ensured by catering (rise of 6.8 %), while in accommodation sector there was a drop of 3.1 %.

A significant positive impact on the growth of total value added was ensured by information and communication sector (rise of 10.1 %), which was promoted by the rise in volume of provision of information services by 14.5 % as well as of computer programming and consultancy sector ( by 18.3 %), in turn a drop is observed in provision of telecommunication services (by 5.4 %).

Upturn in financial and insurance activities of 0.9 % was promoted by rise in insurance, reinsurance and pension funding of 54.7 % and fall in financial service activities and activities auxiliary to financial services and insurance activities – (of 9.8 % and 0.9 %, respectively). Growth in insurance, reinsurance and pension funding was ensured by gross premiums written in non-life insurance, reduction in total claims due in life insurance and reduction in total gross claims paid concurrently with an increase in employer contributions to private pension plans.

Increase of 2.1 % in professional, scientific and technical activities sector was promoted by activities of head offices sectors, management consultancy activities and advertising and market research (rise of 17.0 %), provision of architectural and engineering activities (6.4 %) and other professional, scientific and technical activities (2.7 %). Negative impact on the development of sector is observed in legal and accounting activities (drop of 4.5 %) and provision of advertising and market research (1.2 %).

Over a longer period of time administrative and support service activities show a steady growth (rise of 3.9 % in the 2nd quarter). The situation varies from sector to sector – positive development trends can be observed in rental and leasing services sector (increase of 3.0 %), travel agency, tour operator reservation services (3.4 %), security and investigation activities (7.2 %), building maintenance and provision of landscape architectural services (14.3 %). In the 2nd quarter a negative impact on the development of sector was observed in labour recruitment and provision of personnel – a drop of 2.7 %, as well as in office administrative activities (4.6 %).

Reduction of 5.3 % on taxes on products (mainly value added tax, excise and customs taxes) was determined by drop in income from value added tax.

Expenditure approach

(at constant prices, seasonally and calendar non-adjusted data)

In the 2nd quarter of 2023, compared to the corresponding period of the previous year, total household expenditure decreased by 1.2 %. Expenditure on food products purchased both in retail sale and in e-environment decreased by 5.3 %. Expenditure on housing, water, electricity, gas and other fuels decreased by 8.2 %. Expenditure of households on transport (public transport, purchase and exploitation of transport vehicle) has grown by 12.9 %.

Government final consumption expenditure grew by 5.9 %.

Investment in gross fixed capital formation rose by 5.1 %, of which in dwellings, other buildings and structures it has grown by 15.3 % and in intellectual property products (research, computer software, databases, copyrights, etc.) by 0.1 %. In turn, investment in machinery and equipment, of which in transport vehicles – decreased by 1.8 %.

Exports of goods and services fell by 1.5 %, of which exports of goods by 5.4 %, but exports of services – rose by 9.8 %. The main commodities in exports were wood and products of wood (except furniture), machinery and mechanical appliances as well as electrical machinery and equipment. In the 2nd quarter of 2023, the main export services were exports of transport services and other economic activity (R&D services, professional and management consulting services, technical, trade-related and other business services) as well as computer services.

Imports of goods and services decreased by 2.9 %, of which imports of goods reduced by 5.9 %, but imports of services increased by 13.4 %. Mainly, electrical machinery and equipment, machinery and mechanical appliances were imported. Main imports services: transport services and other economic activity services.

Income approach

(at current prices, seasonally and calendar non-adjusted data)

Compared to the 2nd quarter of 2022, in the 2nd quarter of 2023 compensation of employees increased by 13.5 %, of which total wages and salaries by 13.6 % and employers' social security contributions by 13.0 %.

The largest growth in total compensation of employees was in agriculture, forestry and fishing sector (of 27.2 %); in the sector group of wholesale, retail trade; repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities (15.9 %) and information and communication sector (15.3 %). Compensation of employees in services sectors has risen on average by 13.6 %.

Gross operating surplus and mixed income decreased by 4.9 %, whereas the balance of taxes on production and imports and subsidies went up by 11.1 %.

GDP data revision is expected due to the update of the GDP time-series and integration of annual data, which were calculated using data sources of annual periodicity, into time-series. The updated information will be available on the official statistics portal on September 29.

Time series of historical data and revision values of main GDP indicators are available for download in Excel files in the OSP GDP metadata section.

Methodological information

Calculations of quarterly data of the GDP are made in line with the methodology of the European System of Accounts (ESA 2010). Main data sources used in calculations are:

• Surveys of quarterly and monthly enterprises and institutions;

• Labour Force Survey data carried out by the CSB;

• Data from the Ministry of Finance, the Treasury and the State Revenue Service;

• Latvijas Banka;

• Data from the Institute of Agricultural Resources and Economics.

The GDP statistics from production and expenditure approach is calculated at current prices (registration and calculations are made at the actual prices of the corresponding period) and constant prices. The indicators at constant prices are expressed at prices of the previous calendar year and prices of the reference year (chain-linked), thus excluding the effect of changes in prices during the certain period.

To calculate GDP at the prices of the previous calendar year the actual prices of the previous calendar year are used as a base and the “annual average” method (where each running quarter (or year) is calculated at the average prices of the previous year) is used. To make the calculations, various deflators are used. Both volume indices and price indices may be used as deflators. The following price indices are used: consumer price index, producer price index, construction cost index, services producer price index, price indices of agricultural products, export unit value index, import price index. The following volume indices are used: change in number of employees and change in natural indicators (e.g., in removals, passenger number, etc.).

To calculate GDP at the prices of the reference (base) year (currently, prices of 2015) the indices calculated from the GDP indicators at the prices of the previous year are used to chain-link the calculated volume indices with 2015.

GDP from the income approach is calculated at current prices only.

The published data are adjusted in line with the Guidelines for CSB Revision Policy. The adjustments are made due to receipt of specified information as well as the latest administrative data, inclusion of new economically active enterprises and institutions in surveys, specification of economic activity of sector of enterprises.

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More information on quarterly data:
Gita Ķiņķevska
Quarterly National Accounts Section
E-mail: Gita.Kinkevska@csp.gov.lv
Phone: +371 67366791