The recession in Latvia is over, Prime Minister Valdis Dombrovskis told an Aug. 9 press conference in Rīga called to discuss the latest economic indicators.
The announcement comes less than two months ahead of the Oct. 2 parliamentary election, in which the prime minister’s centrist Vienotība alliance is vying for control of the Saeima against the center-left Harmony Centre.
“The recession is over and on the basis of certain indicators it can be expected that in the second part of the year Latvia’s economy will regain growth in terms of both quarterly and annual indicators,” Dombrovskis said during the press conference, according to his press secretary. “This means a more positive gross domestic product, tax income, employment and other rates.”
Economists say a recession is over when the gross domestic product increases for two consecutive quarters, the prime minister’s office noted.
Statistics cited by Dombrovskis and Economic Minister Artis Kampars included:
- The GDP grew 0.3 percent in the first three months of this year and 0.1 percent in the second quarter. Dombrovskis and Kampars noted that while the level of growth is small, it cannot be disregarded after Latvia’s heavy economic downturn.
- Industrial production in the second quarter increased 6 percent compared to the first quarter.
- Retail production was up 1.7 percent in the second quarter.
- Unemployment is down and price indices are up.
The prime minister’s office acknowledged that “a small economic downturn still remains,” but added that the numbers compare favorably to the 18 percent drop in the GDP last year.
A Bank of Latvia economics expert suggested that the GDP could turn positive during the third or fourth quarter of this year.
“Several factors are still at play, however, which make us expect an uneven development and remain cautious regarding GDP forecasts for the subsequent quarters,” Igors Kasjanovs said in a commentary posted Aug. 9 on the Bank of Latvia’s website. “The near future developments and risks most important for the Latvian economy are the imminent parliament elections, the adoption of the 2011 state budget and the related undertakings as well as a possibly weaker growth of the European economy at the end of the year and in 2011.”
However, Kasjanovs cautioned that “GDP growth in one or two quarters in itself is no guarantee that the growth will continue in the subsequent quarters.” He noted that both Estonia and Lithuania experienced recent bumps after seeing their economies begin to rebound.
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