Macroeconomic Forecast Latvia

Reflective of Latvia's epic economic crisis, the current account has flipped from deficit to surplus during the first five months of the year. Indeed, having posted a EUR1.47bn shortfall in January-May 2008, the current account swung into the black to the tune of EUR370.2mn over the same period in 2009. Given the outright implosion of imports as domestic demand collapses, we hold to the view that the current account will post a full-year surplus in 2009. However, given the size of the surplus so far, we have adjusted our end-year figure, and now project the surplus reaching 1.4% of GDP.

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