On the Q3 2021 GDP data

In the third quarter of this year, the Latvian economy grew by 5.1% year-on-year, and by 0.6% compared to the previous quarter. As might have been expected, the GDP growth estimate has been revised upwards compared to the preliminary data; previously, the CSP had reported that annual GDP growth was 4.8%. It is expected that the total GDP growth for this year will be around 5%, with a similar performance likely next year.

In the third quarter, industries oriented towards both exports and the domestic market grew at a similar pace. Service sectors grew more rapidly year-on-year than goods producers, partially balancing out last year's significant decline. Manufacturing grew considerably stronger than the economy as a whole (7.9%), but the goods sectors were dragged down by losses in the energy sector, which were largely caused by the adverse effect of high gas prices on electricity production.

A fantastic increase has been recorded in financial services (+41.7%), but this only balances out a similar decline in the previous two years, meaning the sector has simply returned to 2017-2018 levels. Medical and social care services continue to climb very rapidly (+19.8%); this is largely a pandemic effect. We will likely see a decline in this sector's GDP data next year, yet its share in the economy will remain above its historically typical level because public demand and funding have both increased. The contribution of information and communications also rose sharply (+9.5%), mainly due to growing exports of information and programming services.