The growth of the manufacturing industry is allowed to be maintained by the accumulated raw material reserves of the companies, at the same time actively searching for alternative raw material markets, the representatives of the Ministry of Finance (MoF) said.
At the same time, Latvian industrialists continue to reorient to new markets for the import of raw materials and the export of manufactured goods in difficult conditions caused by rising energy and fuel prices, according to the Ministry of Finance.
In April, compared to April 2021, the manufacturing sector in Latvia showed an increase in production by 5.3% at constant prices, according to the latest data from the Central Statistical Bureau, while the total growth in industry is 3.7%.
April is the second full month in a row, with Latvian industrialists working in conditions where the negative effects of war and the resulting trade restrictions must be taken into account. However, so far the total production volumes remain high and increase compared to the corresponding period of the previous year, the representatives of the Ministry of Finance emphasize.
In the first four months of this year, the manufacturing industry grew by 6.8% year-on-year, with the timber industry making the largest contribution, growing by 7.1%. There were also significant increases in the production of construction materials (16%), fabricated metal products (9.2%), printing (19.2%) and chemicals and chemical products (22.1%). In turn, small reductions in production volumes in only two sub-sectors – food (2%) and paper and paper products (4.8%).
Although manufacturing growth grew by 5.3% in April, total industrial growth was slowed to 3.7% by a decline of 11.1% in mining, the first year-on-year decline since December last year, and a decrease of 1% in electricity and gas supply. 5%, where in January-March this year the average decrease was 16.5% year-on-year.
In March and April, the largest manufacturing sub-sector – the wood industry – gained momentum, increasing by 16.7% and 8.4%, respectively. The increase in April this year indicates positive trends, taking into account the high base in April last year, the representatives of the Ministry of Finance emphasize.
In the production of construction materials, growth has been taking place for the seventh month in a row, with the volumes produced in April this year exceeding the volumes of the previous year by 10.7%. Finished metal products are also produced by 2.4% more than last year, ensuring growth in the industry since March 2021. Similarly, the production of car trailers and semi-trailers has not shown a decrease in production volumes since October 2020, with the industry growing by 23.3% in April this year.
Meanwhile, food production volumes have not changed significantly, increasing by 0.4%, but the production of beverages has been showing strong growth since March 2021, with the industry growing by 16.8% in April compared to April last year.
The printing and reproduction industry has also been showing steady growth since April 2020, reaching 18.8% in April this year. The industry’s influence on the total manufacturing industry is also growing every year.
For the first time since the beginning of 2021, the production of chemical substances and products no longer shows growth, which decreased by 12.9% in April this year. The production of textiles (by 10.6%) and the manufacture of machinery and equipment (by 12.6%) also decreased.
In April, the amount of precipitation in Latvia was above the norm, thus hydropower plants were able to produce 10.7% more electricity than in April last year. On the other hand, cogeneration plants produced 38.3% less electricity than last year, which is the total gross electricity production similar to April a year ago, decreasing by 0.1%, but the total electricity and gas supply was 1.5% lower than last year. . In April of this year, for the first time since April last year, more electricity was exported than imported.
The results of the surveys compiled by the European Commission show that after a slight deterioration in the mood of Latvian industrialists in March and April, the level of confidence stabilizes in May and will not deteriorate further, the representatives of the Ministry of Finance inform. The first and second waves of the Covid-19 pandemic have affected industrial sentiment far more than the war in Ukraine. Industrial sentiment is most commonly affected by the expected intensity of production in the coming months, which, after declining in March and April, are no longer declining in May.
In turn, the European Union’s overall economic sentiment index continues to deteriorate and, after a significant improvement in sentiment in the second half of 2021, has fallen below the pre-pandemic mark affected by the current war in Ukraine and its negative economic consequences and rising prices.