RIGA, Oct 30 (Reuters) - Latvian retail sales suffered their biggest annual decline in nine years in September in a further sign of the economic slowdown gripping the small Baltic state.
Sales, which have declined every month since April, fell 13.4 percent from a year earlier and were 4.1 percent lower than the previous month, the statistics office said on Thursday. They fell 4.9 percent in the third quarter from the second quarter.
"Weak (retail sales) development was expected, as the economic slowdown has intensified in Latvia during the recent months," Nordea analyst Anssi Rantala said in a research note.
The data came as parliament debated the first reading of the 2009 budget.
The government has said it will change the budget before the second reading in order to reduce the planned budget deficit from 1.85 percent of gross domestic product (GDP).
Finance Minister Atis Slakteris said this was necessary because the economic slowdown was depressing government revenue and as global financial turmoil was making borrowing difficult.
"Today that means that we cannot borrow to cover the deficit," he told parliament.
He said the deficit would be revised, first bringing it down to 1.5 percent of GDP and then gradually to closer to balance.
The government has already said it will revise its 2009 GDP forecast to a contraction of 1 percent, rather than the 2 percent growth forecast on which the previous version of the budget was based.
One piece of good news for the government on Thursday was the signing of a 500 million euro ($652.8 million) loan with the European Investment Bank (EIB) for co-financing EU projects. (Reporting by Patrick Lannin, editing by Swaha Pattanaik)