Latvia’s gross domestic product (GDP) contracted 1.5 percent in the first quarter (Q1) of 2020 compared with the same period last year, the Baltic country’s national statistics office says.
Compared to the last quarter of 2019, the Latvian economy decreased 2.9 percent, according to seasonally and calendar-adjusted data.
The Ministry of Economics said in a statement that although the impact of the COVID-19 pandemic only started to be felt in mid-March, an overall downturn in the first quarter of this year had been expected.
Household consumption slowed substantially in the first three months, down 4.5 percent year-on-year as people started spending less on transport, recreation and entertainment when various restrictions were imposed to contain the spread of the coronavirus.
Despite the spread of COVID-19 in Latvia’s key markets and disruptions in supply chains, Latvian exports picked up 3 percent in the first quarter.
The negative effects of the COVID-19 pandemic have hit Latvia’s hospitality sector, air transport, passenger services, entertainment industry and services sector especially hard. There are indications that the economic slump in the second quarter will be even deeper, the ministry said.
Uncertainty about the pandemic’s impact on the economy remains extremely high as it is still not clear for how long the virus will keep spreading in Europe and the world.
Considering the current situation, the ministry projects the national economy to shrink by an estimated 8 percent this year and return to positive growth at the beginning of 2021.