In October 2020, compared to October 2019, the volume of manufacturing output1 according to calendar adjusted data at constant prices increased by 1%, according to the Central Statistical Bureau (CSB).
Production also increased in mining and quarrying – by 14.2%. In turn, electricity and gas supply decreased by 17.5% due to a decrease in the volume of electricity produced in hydropower and cogeneration plants and gas supply to consumers. Total industrial output decreased by 1.2%.
In October of this year, out of a total of 22 manufacturing industries, 12 industries showed an increase in output, including two out of the three largest in proportion – manufacture of wood and of products of wood and cork, and manufacture of food products (8.2% and 2.5% respectively). . Compared to the corresponding month of the previous year, the increase in production was in the manufacture of electrical equipment – by 19.8%, in printing and reproduction of recorded media – by 11.4% and in the manufacture of computer, electronic and optical equipment, and the first month of this year manufacture of motor vehicles, trailers and semi-trailers – by 9.7%.
At the same time, the decline in production was still in the manufacture of basic pharmaceutical products and pharmaceutical preparations and in the repair and installation of machinery and equipment – by 32%. Output also decreased in the manufacture of wearing apparel – by 11.7%, in the manufacture of beverages – by 9.5% and in the third largest manufacturing sector – in the manufacture of fabricated metal products, except machinery and equipment – by 6.9%.
In October 2020, compared to September 2020, according to seasonally adjusted data at constant prices, manufacturing output increased by 0.9%, while output in electricity and gas supply decreased by 4.2% and in mining and quarrying – by 4.1%. Total industrial output decreased by 0.1%.
In October 2020, compared to October 2019, the total turnover of manufacturing according to calendar adjusted data at current prices increased by 5.2%. Turnover in exports increased by 10.4% (including in the euro area – by 9.8%, outside the euro area – by 10.9%), but in the domestic market decreased by 3.9%.
In October 2020, compared to September 2020, the total turnover of manufacturing increased by 4.3% according to seasonally adjusted data. Turnover in the domestic market increased by 1.3% and in exports – by 5.9% (including in the euro area – by 9.9%, outside the euro area – by 2.8%).
The industry will balance on the log next year
Warming up the economy through improved infrastructure is their high hope, but next year’s results will largely depend on the fate of the European Development and Sustainability Fund, Luminor economist Pēteris Srautiņš.
“Demand this year has not had to complain about industries whose sales are largely dependent on small-scale construction and repair, primarily wood and also the chemical industry. The Federation of the Timber Industry reports that next year’s supply of the most important raw material for our woodworking, coniferous sawlogs from state-owned forests, which provide more than half of the local lumber, will fall by about 15%. “The beam is also an import of simple lumber from neighboring countries, the processing of which into higher value – added products is one of the most important directions of industry development,” comments the economist.
“For other industries, 2021 looks promising. For some food companies, the question mark is the echo of this year’s shopping campaigns in crowded kitchen cabinets, but investing in production capacity and product diversity in companies that have benefited from consumer stockpiling instincts could balance it out. “Light industry more than other sectors suffered from weak demand this year, so next year may be a relief for him,” P. Strautiņš admits that the sectors that will benefit from the car purchase and investment boom during the pandemic.
In general, he considers next year’s opportunities for producers to be good, but he has to go through a difficult time at the turn of the year. More and more companies are reporting that they have been forced to reduce production capacity due to quarantine. Restrictions on socialization reduce the opportunities for the service sector, but they benefit the most important export sector, so please follow them, the economist adds.
Industrial performance in the second wave of COVID-19 is better than in spring
Latvia’s manufacturing output in October has already exceeded the level of the beginning of this year, and it is one of the best industrial performances in the European Union this year, although significant improvements in industry have been observed in other countries in recent months. This shows that the competitiveness of Latvian producers is still good, he concludes Citadels economist Mārtiņš Āboliņš. He predicts that the manufacturing industry is likely to continue to grow in the remaining months of the year. This year, the sector as a whole is expected to fall by around 2%, which is significantly better than the projected decline in GDP of 4.7%. Growth in industry could be in the range of 3% to 5% next year, but it should be borne in mind that as the epidemiological situation improves, demand for services will grow significantly faster than for goods, which could slow down industrial growth.
The manufacturing industry is hardened and ready for the second wave
The impact of a pandemic on different sectors of the economy varies greatly. Some are in serious crisis and companies are worried about survival, while others have felt little weakening this year and have been able to recover relatively quickly. The former mainly include the service sector, while the second group includes the productive part of the economy, including manufacturing. Social distancing – both in connection with the introduced restrictions and in connection with the caution of the population – has facilitated the transition of consumption from services to goods, says Agnese Buceniece, a senior economist at Swedbank.
“During the spring, both Latvian producers and their partners abroad have received training, which now, with the virus spreading more strongly, allows more efficient organization of work in production plants and cooperation with partners. Supply chains seem to be more resilient for the time being. In Latvia, however, the outlook for further business development among producers in November was similar to October, much more optimistic than in the spring, but more cautious than before the pandemic. Large companies are feeling a little better, but small ones are more concerned. reason to believe that it b will be less than in the spring. Progress in vaccine development is also boosting optimism. We still have to put up with a little bit until the processors manage to recoup the pandemic time loss, “says A.Buceniece.
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