In accordance with flash estimate published the CSB, which is based on currently available statistical data and econometric models, the Gross Domestic Product (GDP) increased by 3.6%, compared to first quarter of 2007.
More precise data and more extensive analysis of first quarter 2008 GDP will be published on June 9, 2008. In the meantime we are rather left guessing again. First of here is the year on year chart:
If we look at the rate of decline indicated by the slope of the line over the last three quarters one thing is clear: this is now that long feared "hard landing". I think though that had already been clear for some time from the data we had been seeing from retail sales and industrial output.
I will try and put something more extensive up either later this afternoon or early tomorrow, but if we take into account that quarter on quarter growth over the 3 previous quarters had been at a rate of 2.4, 2.5 and 1.2% respectively, and that this added up amounts to 6.1% growth in 3 quarters it is pretty clear that we must have seen quite a strong contraction (in seasonally adjusted terms, since the other numbers are seasonally adjusted) in Q1 2008. More later.
What a chump I am sometimes. Basically the easiest thing to do in life is to miss the blindingly obvious. Now what we do know - according to the flash estimate, which can be revised of course, but as one commenter (see below) astutely notices normally the revisions have been downwards of late - we do "know" that GDP probably rose by something in the region of 3.6% year on year, and we do know that GDP in Q1 2007 was 2058.2million lats (I just looked this up at Lavijas statistikas). So if we increase this number by 3.6% we get 2132.2 million lats (since I just did the calculation), and that puts Q1 2008 at a level lying below the 2,192.1 million lats of Q2 2007 and below the 2,240.9 million lats of Q3 2007 (all at constant, inflation adjusted, prices).
That is to say that - in constant price terms - Latvian GDP hit a peak at some point between Q2 and Q3 2007 (lets say August 2007) and since that time has been steadily CONTRACTING. Now I know there are probably hundreds of different ways of skinning a chicken, and of course you can read data everywhichway you want to, and there are seasonal factors to take into account, but as far as I am concerned there is no getting away from it, on any reasonable criterion the Latvian economy is now in recession, and has been since the middle of last year, and as a result I am now more than happy to stick with my original recession call which I made when I first had site of the detailed Q4 2007 data.
As I say the Latvian economy is contracting, and I see no sign (or jutification for thinking) that it is going to start expanding again in the immediate future. Obviously some sectors like agriculture and transport will have picked up in the spring, but these will more than likely be offset by the continuing slowdown in other areas. So I really don't see where people are getting all those positive GDP growth numbers for 2008 from at this point, I really don't.