GDP has fallen by 3.6 % in 2020 and by 1.5 % in the 4th quarter
Data compiled by the Central Statistical Bureau (CSB) show that in 2020, as compared to 2019, Gross Domestic Product (GDP) reduced by 3.6 %. In 2020, GDP at current prices amounted to EUR 29.3 billion.
Compared to the 4th quarter of 2019, in the 4th quarter of 2020 GDP reduced by 1.5 % (according to seasonally and calendar non-adjusted data). Compared to the 3rd quarter, GDP at constant prices has increased by 1.1 % (according to seasonally and calendar adjusted data).
In 2020 GDP at current prices comprised EUR 29 334.0 million EUR
(2020 compared to 2019, at constant prices)
During 2020 value added of the production sector has risen by 0.4 %, but of services sectors decreased by 4.8 %.
Increase was registered in volume of agriculture, forestry and fishing – of 1.8 %, which was mainly affected by production output rise in crop and livestock production – of 2.8 %, forestry and logging – of 1.1 %, but reduction of 5.8 % was recorded in fishery. In 2020, weather conditions were very favourable for the development of crop production sector, which ensured highest harvested production of grain in Latvia's history (3.5 million tonnes) and rise of crop production over the previous year of 5.1 %. In turn, volume of livestock production fell by 0.8 %.
Last year growth was observed in mining and quarrying, when in weather conditions favourable to the development of the sector, it increased by 8.8 %.
In manufacturing (reduction of 0.9 %) a drop was observed in 14 out of 22 sub-sectors. In the sub-sector having the largest share in manufacturing – manufacture of wood and of products of wood – production output increased by 4.5 % (it was mainly promoted by rise in volume of sawmilling and planing of wood; impregnation of wood). Rise was also recorded in manufacture of electrical equipment (of 5.8 %), printing and reproduction of recorded media (6.8 %), manufacture of chemicals and chemical products (3.2 %), manufacture of rubber and plastic products (3.6 %), as well as in manufacture of computer, electronic and optical products. But reduction was observed in manufacture of food products (of 0.3 %), manufacture of non-metallic mineral products (1.4 %), manufacture of fabricated metal products (3.3 %), as well as manufacture of furniture (1.2 %).
In electricity, gas, steam and air conditioning supply manufacturing volume fell by 6.0 %.
Construction production volume rose by 2.6 %, which was promoted by growth in two out of three sub-sectors. The largest contribution to the development of construction sector was provided by increase of specialized construction activities of 8 % (other specialized construction activities rose by 25.4 %, building completion – by 5.8 %, electrical, plumbing and other construction installation activities – by 4.7 %, while drop of 2.6 % was observed in demolition and site preparation sector). Over the year, construction of buildings grew by 0.9 %, civil engineering reduced by 1.5 %, of which construction of other civil engineering projects n.e.c. (water projects and other civil engineering n.e.c.) – by 22.9 % and construction of utility projects fell by 0.4 %, but construction of roads and railways increased by 0.4 %.
During 2020 retail trade increased by 1.5 %, of which trade in food products – by 3.6 %, but trade in non-food products – reduced by 2.4 %. Wholesale trade, retail trade and repair of motor vehicles and motorcycles reduced by 12.2 %, but wholesale trade – by 3.0 %.
Significant drop in transport and storage sector of 14.9 % was promoted by fall in passenger traffic of 53.3 %, warehousing and support activities for transportation of 9.6 %, freight transport of 3.3 %, but there was an increase in postal and courier activities of 0.1 %.
One of sectors affected the most by COVID-19 crisis in 2020 was accommodation and food services sector (drop of 38.1 %). Restrictions imposed on travelling and movement for reduction of consequences of pandemic significantly affected development of accommodation sector (reduction of 53.0 %), in turn, gradually tightening limits on gathering and epidemiological requirements for provision of services, volume of catering sector reduced by 32.6 % during a year.
Value added of information and communication sector reduced by 6.2 %, of which of 2.0 % in computer programming and consulting, of 7.5 % – in information services and of 10.3 % – in telecommunication services.
In 2020, financial and insurance activities fell by 5.7 %, which was because of the decline in financial service activities of 15.9 %. Drop in sector was affected by reduction of profit on transactions with financial instruments and decrease of commission income of credit institutions. Rise of 34.1 % in insurance, reinsurance and pension funding was ensured by increase in contributions to private pension plans, rise in life insurance gross premiums written and drop in gross claims paid of non-life insurance. In activities auxiliary to financial services and insurance activities increase of 8.7 % was promoted by results of successful activity of several enterprise groups.
Drop in volume of professional, scientific and technical activities of 0.1 % was affected by reduction in head offices; management consultancy activities – by 0.2 %, advertising and market research – by 1.4 %, other professional, scientific and technical activities – by 2.7 %, architectural and engineering activities; technical testing and analysis – by 4.8 %. In turn, growth of 3.7 % in legal and accounting activities left positive impact on the sector.
Administrative and support service activities reduced by 5.3 % during 2020. The largest impact had travel agency, tour operator reservation services sub-sector, which was severely affected by measures imposed due to COVID-19 pandemic (drop of 60.0 %). Reduction was also observed in security and investigation activities – of 12.5 % and labour recruitment and provision of personnel – 4.7 %. In some areas volume of services provided during a year increased – in rental and leasing services sector there was a rise of 4.8 %, but in building maintenance and landscape architectural services sectors – 0.9 %.
Due to restrictions determined in the country to prevent the spread of infection, one of services sectors that was hit the hardest by COVID-19 pandemic was arts, entertainment and recreation, where drop against the corresponding period of the previous year reached 26.6 %. The largest decrease was in gambling and betting activities (of 40.6 %), but significant reduction was also registered in sports activities, amusement and recreation activities and creative and arts activities.
In 2020 the volume of taxes on products (mainly value added tax, excise and customs taxes) decreased by 4.6 %.
GDP changes in the 4th quarter of 2020 and 2020 by kind of activity
(as % compared to the corresponding period of the previous year or previous year)
(2020 compared to 2019, at constant prices)
In 2020, compared to the previous year, total household expenditure fell by 10.3 %. It was mainly affected by the spread of COVID-19 virus in society, which started at the end of first quarter. Restrictive measures taken by the government significantly affected expenditure of households in several consumption groups, of which in two out of traditionally largest expenditure groups: transport (public transport, purchase and exploitation of transport vehicle) and recreation and culture. Expenditure in these final consumption groups reduced by 13.7 % and 51.4 %, respectively. Affected by the pandemic, households also spent 39.6 % less on accommodation and catering services. Due to limitations imposed by the government on provision of catering services, part of households prepared meals at home, which contributed to increase of household expenditure on purchase of food products by 3.4 %. Household expenditure on housing rose by 0.9 %.
Government final consumption expenditure grew by 2.6 %.
Investment in the gross fixed capital formation showed a slight positive trend and is larger by 0.2 % than last year. Investment in dwellings and other buildings and structures rose by 1.5 %. Investment in machinery and equipment (of which in transport vehicles) reduced by 2.2 %, but investment in intellectual property products – grew by 2.6 %.
Exports of goods and services decreased by 2.7 %. Exports of goods has risen by 5.5 %, reaching the highest exports value so far. Last year main commodities in exports of Latvia were wood, articles of wood and wood charcoal; electrical machinery and equipment; machinery and mechanical appliances. COVID-19 pandemic left negative impact on exports of services, which reduced by 21.3 %. The drop was registered also in exports of transport and tourism services, but exports of other economic activity (R&D services, professional and management consulting services, technical, trade-related and other business services) and computer services increased.
Imports of goods and services decreased by 3.3 %. Total imports of goods remained at the level of 2019, while imports of services reduced by 19.0 %. Mainly, electrical machinery and equipment; machinery and mechanical appliances, vehicles and associated transport equipment were imported. Imports value of transport and tourism services, computer services and financial services has reduced, but imports of other economic activity and construction services has increased.
GDP changes in the 4th quarter of 2020 and 2020 by kind of expenditure
(as % compared to the corresponding period of the previous year or previous year)
(2020 compared to 2019, at current prices)
Compared to 2019, in 2020 compensation of employees grew by 1.5 %, of which total wages and salaries – by 1.9 %, but employers' social security contributions remained at the level of 2019. The largest growth in total compensation of employees was in information and communication services sector – by 10.4 %, but in the group of wholesale trade, retail trade and repair of motor vehicles and motorcycles, transport and storage and accommodation and food services sectors it has reduced by 5.6 %. Gross operating surplus and mixed income decreased by 9.7 %, whereas the balance of taxes on production and imports and subsidies went down by 4.9 %.
Total wages and salaries and changes thereof
Possible changes made by the government sector estimates, balance of payments and financial services sector, moreover updated indices of business services will be taken into account in the GDP calculations and balancing of the quarterly national accounts on the 85th day after the reference quarter. The updated information will be available on Official statistics portal (OSP) on 26 March.
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.
More information on the GDP is available in the OSP section Economy “Gross domestic product – quarterly data” and “Gross domestic product and value added – annual data”.
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;
Data from the Bank of Latvia and the Financial and Capital Market Commission;
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).
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.
COVID-19 crisis in time-series analysis area at the moment is considered as occurrence that is not seasonal, therefore, impact of crisis is not excluded from the data when carrying out seasonal adjustment. It must be taken into account that during the crisis both unadjusted and seasonally adjusted data may be potentially exposed to greater data revisions than they were in a pre-crisis period. More information on seasonal adjustment during the COVID-19 crisis is available here.
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 latest administrative data, inclusion of new economically active enterprises and institutions in surveys, specification of economic activity of sector of enterprises.