RIGA - Latvia exceeded itself last year in terms of economic expansion, as gross domestic product grew 10.2 percent, the highest level since the country gained independence. In the fourth quarter alone, the economy expanded 10.5 percent, the Latvian Statistics Bureau announced last week.
The stellar growth was fostered by a 17.4 percent increase in trade, 16.2 percent in the transport and communications industry, 15.5 percent in construction and 6.3 percent in manufacturing.
Trade accounted for approximately one-third (3.8 pct) of the overall GDP growth. It now accounts for almost one-fifth of GDP, while transport and communications almost 16 percent.
"I think it will be no surprise to anybody that trade is the fastest growing among Latvia's key industries," said Zigurds Vaikulis, head of market analysis at Parex Asset Management.
"Both industry and trade showed growth in the fourth quarter of 2005, and the development of other branches of the economy has also been rapid," said Liene Kule, a senior analyst at Hansabanka. She added that trade and construction would remain Latvia's key industries in the future, as their growth is ensured by domestic demand.
Glancing across the Baltics, Estonians also had reason to cheer. GDP there grew 10.5 percent in the fourth quarter of 2005, putting it on par with Latvia. During the previous three quarters of the year, Latvia had the hottest economy.
Lithuania saw its economy grow 8.8 percent last year.
In Latvia, GDP per capita in 2005 was 3,046 lats (4,334 euros) in constant prices, which is 10.8 percent, or 297 lats, more than in 2004, according to bureau statistics.
Meanwhile, the statistics office announced on March 8 that consumer prices rose 0.4 percent this February month-on-month, while annual inflation slowed to 6.9 percent. Prices were influenced mainly by fluctuations in vegetable, alcohol and clothing prices, bureau experts said.
In February, prices of goods rose by 0.4 percent, while those of services increased 0.3 percent. On a year-on-year basis, prices of goods increased 6.9 percent year-on-year and of services 6.8 percent.
Hansabanka's Kule commented on the inflation data by saying, "These results are not sufficient to speak about full price stability as prices kept growing in large enough number of areas."
SEB Unibanka analyst Andris Vilks echoed the sentiment, saying there was little cause for celebration. "The same factors that were, and will be here, won't permit inflation to reduce seriously in the coming months. Those are first of all food prices, housing costs, health care, education, restaurant and hotel services," he said.
Inflation will also grow due to gradual increase of various regulated tariffs, warned Vilks.
