Flash comment: Lithuania - October 30, 2015
GDP growth strengthened to 1.8% in Q3

According to the flash estimate, annual GDP growth accelerated to 1.8% in the third quarter of this year, in line with our expectations. Quarterly seasonally adjusted GDP growth increased to 0.5%.

Value added growth in construction, manufacturing and trade had the largest contribution to GDP growth. Household consumption remains the main source of increase in economic output – annual retail trade growth increased to 6% in the third quarter. Even though nominal export of goods and services decreased by 4.7% in July-August this year compared with the same period a year ago, changes in volumes most likely were much smaller and could have remained positive (during the third quarter export prices were about 5.0% lower than a year ago). However, investment growth probably weakened after very strong performance in the first half of this year.

Economic sentiment indicator decreased marginally to -5 in October mainly due to seasonal weakening of construction confidence. However, confidence in other sectors were higher or equal (in service sectors) to the level a year ago. 

Outlook: more positive developments

We expect economic growth to continue strengthening going forward. Domestic demand should remain strong as problems in the Eastern export markets did not reverse positive development in the labour market. Higher absorption of EU structural support should contribute to investment growth as companies has both sufficient reason and means for higher investments. Export growth should also accelerate as negative impact from Russia will start to fade away and many companies have successfully diversified towards more stable markets in the EU. We forecast GDP to increase by 1.8% this year, before accelerating to 3.3% in 2016.

For more information about this report, please contact Ms. Vaiva Šečkutė, +370 5 258 2156, Vaiva.Seckute@swedbank.lt

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