Manufacturing turnover in Latvia declined by 5.1% y/y and 3.6% m/m in April 2013, data by Central Statistical Bureau (CSB) shows. The decline was 5.9% y/y in the domestic market and 4% y/y in exports. In the first quarter of the year, the overall manufacturing turnover declined by 0.4% q/q, mostly due to the external sales that decreased by 2.3% q/q. In y/y terms, the manufacturing turnover growth more than halved to 4.7% y/y in Q1 vs. 10.1% y/y seen in Q4/12.
We noted that the performance of the indicator in the beginning of 2013 was affected by output disruptions at troubled steel major Liepajas Metalurgs. Also in April the largest decline in both domestic and export market was for basic metals (total drop of 46.8% y/y). At the same time exports of electronic products, textiles, beverages, and food products remained strong at a double-digit y/y growth pace.
The Bank of Latvia expects weaker performance of the manufacturing sector this year than in 2012 due to difficulties faced by some of the largest producers in the country. Also, no clear signs of improving external environment and demand are yet seen. While in spring the energy sector might compensate the decline in manufacturing, in H2/13 a slowdown of industrial output is seen slowing down the overall economic growth.
The economy ministry previously expected the industrial output growth to remain within the 5%-7% range in 2013. FinMin saw the indicator increasing by 4%-5% noting a complicated situation on the main export markets. The Bank of Latvia projected industrial output at 4%-6% in 2013. Finally, analysts of the largest banks surveyed by BNS in the beginning of 2012 expected industrial output to increase by 5%-7% in 2013. Given the February and March data the forecast of FinMin of 4%-5% growth seems to be the most realistic.
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