The Latvian economy grew 1.6% in 2016, a flash reading from the Central Statistical Bureau (CSB) indicated on January 30. 

The result shows economic growth hitting the brakes in comparison to the 2.7% expansion in 2015. However, a fourth quarter growth spurt to 2.1% y/y in unadjusted terms offers hope for the coming year; adjusted growth came in at 1.6%.

The pace of growth in October-December was the fastest since the last quarter of 2015. The expansion was vastly superior to the 0.3% gain the previous quarter.

The acceleration came on the back of a 10% y/y expansion in the industrial sector. The construction sector, the main factor behind the previous quarter’s feeble growth, saw output diminish again, although the fall of -13% was far slower than the -24% in the third quarter.

In adjusted quarterly terms, the economy expanded 0.8%, faster than 0.3% in the third quarter. The CSB will publish a second, more detailed, reading of growth in the fourth quarter and entire 2016 on February 28.

"The end of the year data indicated an improvement in manufacturing, export and retail trade performance," note analysts at Swedbank. "Even though the construction sector was still in recession, it has started to recede slowly. We saw some improvement also in the construction and industrial trade confidence. The fourth quarter data show that the low point (the weak Q3) is past, and the economic growth is gaining pace."