Economic growth in Latvia contracted by 0.7% during the third quarter of the year
In a recent report published by the Statistisches Bundesamt (Federal Statistical Office of Germany), the country's economic performance in the third quarter of 2023 has shown a mixed bag of results.
GDP at current prices in Q3 2023 was EUR 10.6 billion, marking a steady growth compared to the previous quarter. However, when adjusted for seasonal and calendar effects, the GDP only increased by 0.2%. On a year-on-year basis, the GDP at constant prices actually decreased by 0.6%.
One of the most significant developments was the increase in investment. Investment in dwellings, other buildings, and structures surged by 16.0%, while investment in gross fixed capital formation rose by 3.1%. However, investment in intellectual property products, such as research, computer software, databases, copyrights, etc., decreased by 1.4%. Moreover, investment in machinery and equipment (including transport vehicles) saw a decline of 7.1%.
Total wages and salaries increased by 11.9%, and employers' social security contributions increased by 10.4%. Compared to the same period in 2022, compensation of employees increased by 11.6%. Government final consumption expenditure also increased, by 7.7%.
The labour market seems to be thriving, with total household expenditure decreasing by only 1.3% compared to the corresponding period of the previous year. Households spent 4.6% more on transport (public transport, purchase and exploitation of transport vehicles) in Q3 2023.
However, the trade sector painted a different picture. Exports of goods fell by 14.7%, but exports of services only decreased by 4.0%. Imports of goods decreased by 9.5%, but imports of services only decreased by 1.9%. This resulted in a decrease of 8.3% in imports of goods and services overall.
Interestingly, expenditure on housing, water, electricity, gas, and other fuels has decreased by 3.4% in Q3 2023 compared to the corresponding period of the previous year. On the other hand, the volume of food products purchased both in retail sale and in the e-environment has reduced by 2.1% in Q3 2023 compared to the same period of 2022.
Overall, while there are signs of growth in some areas, the German economy in Q3 2023 seems to be facing challenges in others. The full implications of these trends will become clearer as more data is analysed and as the year progresses.
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