Macroeconomic Forecast Latvia

Industrial production has rebounded sharply in recent months, with the latest data from Statistics Latvia showing a 13.3% y-o-y surge in output in May, from 9.7% the previous month. We stress, however, that this owes in large part to base effects given the hefty 19.2% slide in output recorded for the same month a year earlier. Going forward, we expect industrial production growth to moderate through the remainder of the year, with an average growth rate of 2.8% over 2010-2014, mirroring the similarly weak 2.3% average expansion in real GDP over the same period.

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