The Latvian economy grew a seasonally adjusted 0.7% y/y in the second quarter, a flash reading from the Central Statistical Bureau (CSB) showed on July 29.
Economic growth slowed in comparison to the revised 1.5% expansion reported for January-March. The result showed expansion ground to its slowest in any quarter since the start of 2015.
It appears that ongoing problems in the construction sector, in which growth contracted 22% in the second quarter, contributed to the unimpressive GDP reading in the second quarter. Such a big retreat could not be offset by growth in manufacturing and retail trade, which came in at 7% and 3%, respectively.
Seasonally unadjusted, growth came in at 2.1% y/y, the same rate as in the previous quarter. In adjusted quarterly terms, the economy expanded 0.4%.
Despite the weakness in the first quarter, the Latvian economy is still forecast to accelerate to grow above 3% in 2016, benefiting from a rising contribution from exports and investment, according to Swedbank.