Latvian economy grows slightly in Q2

RIGA, Latvia

Latvia's economy, one of Europe's most troubled, posted its second straight quarter of growth in the April to June period, the nation's statistics office announced Monday.

Economic activity in the second quarter increased a slight 0.1 percent compared with the first three months of the year, according to Latvia Statistics' initial estimate. During the first quarter the economy registered a 0.3 percent quarterly uptick.

Prime Minister Valdis Dombrovskis said the data proved that the country had firmly emerged from recession, Latvia's worst since gaining independence in 1991.

"The recession is over, and on the basis of certain indicators it can be expected that in the second part of the year Latvia's economy will regain growth in terms of both quarterly and annual indicators," Dombrovskis told reporters.

Still, on an annual basis the economy fell 3 percent as the construction and services sectors continue to languish, the statistics office said. By comparison, manufacturing is up 14 percent year-on-year in the second quarter.

Latvia's gross domestic product plummeted 18 percent last year -- the worst in the European Union -- as the country recovered from four years of strong growth that saw the economy expand by nearly 50 percent.

As the economy overheated, the country of 2.3 million became insolvent and to stay afloat was forced to borrow euro7.5 billion ($10.5 billion) from international lenders in December 2008.

Government officials and analysts largely agree that the worst of the crisis is over and that the country could return to annual growth in 2011. Latvia's economy is expected to shrink about 2 percent this year.