Compared to February, this March, Latvia's industrial output contracted by 1.5 percent on a seasonally and working day adjusted basis. This composite figure included a 10.8 percent drop in mining and quarrying, a 4.3 percent decrease in manufacturing and a 4.3 percent growth in power, gas and water supply.
Certainly if we look at the charts we will see that the slowdown is now pretty dramatic.
Over the entire first quarter of 2008, industrial output in Latvia declined by 3.1 percent, compared to the same period a year ago.Over the three-month period, output decreased by 4.7 percent in manufacturing and by 0.3 percent in power, gas and water supply, but rose 4.6 percent in mining and quarrying.
Now when we saw the GDP data for the last quarter of 2007 I was arguing at that point that Latvia had quite probably already entered recession (ie quarterly negative growth), and when we come to look at this industrial output data for Q1 2008and put it up against the retail sales data (see chart below) it is very difficult not to think that the Latvian economy is now well mired in recession, especially if we take into account the fact thgat at this point the Latvian government was still trying to run a fiscal surplus, so there is no relief on that front either. So Latvia has now almost certainly got itself well bogged down in recession (even while the inflation fire continues to roar). The only really big remaining question is just how long it will have to wait to come out of this recession, and just what the Latvian economy will look like (in a structural sense) when we get to that point.
A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.
John Maynard Keynes
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