Latvia And Lithuania Report Improvement In Their Current Accounts

The Baltic States, Latvia, Lithuania and Estonia have begun to repair their current accounts deficits which had reached as high as 18-28% of GDP . The first chart shows the current accounts as a percent of GDP for the three countries.

Today Latvia and Lithuania released balance of payments data for June. Both countries show a continuation of the current account surplus that started in February of this year, as shown in the second chart. In Latvia, it has been the surplus on income that has accounted for much of the current account surplus. However, there has also been a declining deficit on goods and services and finally a surplus in June. The balance on current transfers has been small and has had little effect on the overall current balance. The third chart shows the trends in the income and goods and services balances for Latvia.

In Lithuania, the trends are less clear. The income balance only turned positive in June and the balance on goods and services remains in deficit. However, in contrast to Latvia, current transfers have been the major factor accounting for the surplus on current account, as can be seen in the fourth chart.