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Recovery shrinks current account

  • 2010-12-08
  • From wire reports

RIGA - 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, reports Bloomberg. The surplus totaled 37 million lats (52.8 million euros), compared with 288.9 million lats, or 9 percent of GDP, in the third quarter a year ago, show data at the central bank.

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 a 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.