The residents of Latvia, at last, have tasted the sweetness of the macroeconomic growth. Two factors - months - long wage hike and frozen consumer prices – inevitably reflected on turnovers of the Latvian shops and supermarkets. The total retail turnover grew by 3.3% in January and by 5% in February, if compared to the previous year.
The volumes of sale of non-food goods have increased particularly (5.3% and 6.1% accordingly). And in this sphere the trade in IT-equipment, as well as in sports goods has shown the most vigorous growth. It seems that in a new year the Latvian residents decided to renew old computers and break a sweat.
Besides, mail-and-telephone-order retail and e-commerce continued snowballing. The annual gain in food trade was slower, but it also slightly speeded up – from 1% in January to 3.7% in February.
In general, the sentiments of consumers in the first quarter of this year improved. The sentiments of retailers improved yet more vigorously. The past crisis of 2008-2010 is almost forgotten, debts have been paid off or written off, the wage hike is still hasty, consumer prices on the average are stable and even fall down a bit. Therefore, despite the minimum growth in the unemployment rate (partially for seasonal reasons), the household income continues growing; it (income) increasingly frequently is channelled to consumption rather than to saving or paying old debts. All of this supports the consumption expansion.
The Latvian households are not scared yet by doom-laden forecasts of some experts either. In particular, a sudden threatening warning of the head of the Bank of Latvia Ilmars Rimsevics, who forecasted probable problems for the Latvian economics, by reminding that during two months the growth of Latvian GDP might exchange for falling.
But, as is well-known, the river past and God forgotten. Obviously, this year the consumption by the Latvian households would, most likely, still remain the major engine of the economic upturn.
Which is good, since hopes for export, which largely pulled the Latvian economics out of the last recession, are on the decrease. In January 2016, if compared to the same month of 2015, the volumes of Latvian export decreased by 10.9%.
The reduction in export was also pretty much influenced by the fall in trade with third countries, among which Russia used to be the most significant market for Latvia. Its proportion in the Latvian export decreased from December’s 9.7% to 5.2% in January.
Against this background the cautious declarations of the politicians about possible curtailing of anti-Russian sanctions and Russian embargo already by summer of this year, bring hope for extra incentive for the development of the Latvian economics. It’s another matter that hardly anything depends on business in this issue, therefore, all one can do is wait and see, trying to replace export deliveries with domestic consumption.