Macroeconomic Forecast Latvia

Industrial output increased by 1.8% y-o-y on a seasonally adjusted basis in July and averaged an unadjusted 1.2% in the first seven months of the year. In aggregate, manufacturing performance remained subdued in July, with production expanding by just 0.5%. That figure partly reflects the ongoing problems in the wood processing sector, which accounts for about 20% of total manufacturing value-added but has been hit by raw material shortages and rising input costs, as well as by a reduction in external demand. Output has also slowed in the equally important food processing sector (2.7% in July). By contrast several smaller sub-sectors continue to report brisk growth, including pulp and paper (15.1%), rubber and plastics (13.0%), fabricated metal products (14.3%) and electrical machinery and equipment (11.7%).

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