February was a difficult month for the Latvian manufacturing industry, and we do not expect anything good in March or the months to follow. Latvian manufacturers have to deal with a sea of problems, related both to the rapidly disappearing markets in Russia and Belarus, and to disrupted raw material supplies.

Compared with January, production fell by 2.1%, and compared with last February it grew by 2.5%, but this is a much weaker result than January's 9.3% growth. In the first two months as a whole, the manufacturing industry grew by 5.8%.

The result for January was very interesting in that the two largest sectors (wood processing and food processing) shrank month-on-month, but others, primarily those described as high-tech, saw excellent results that ensured growth overall. In February, wood processing recovered strongly (+4.8% month-on-month), but in food processing, the decline continued and even intensified (-3.2%).

The prices of internationally traded products, primarily grain, milk powder and butter, are at record highs, which also means high prices for fresh milk. For those whose main market is Latvian consumers, this creates very sharp price scissors. It is not for nothing that the production decline in the food sector reached 7.5% year-on-year. For farmers, the situation in the markets is favourable, despite high costs, but, as is customary in Latvia, those who are doing well say nothing. The situation in the forest sector is also very contrasting; forest owners and primary processors are generally doing well, but some producers of consumer products are 'squeezed' by the unfavourable ratio of purchase and sales prices. (...)
Photograph from nat-geo.ru used