Flash comment: Lithuania - October 31, 2016
GDP growth decelerated further to 1.7 % in Q3

GDP growth disappointed again and according to the flash estimate economy picked up by 1.7% in the third quarter of this year compared with the same period a year ago. Quarterly growth decelerated from 0.4% in the second quarter to 0.1% in the third quarter.

Such weak growth was unexpected as retail trade growth did not subside in the third quarter and export performance also improved in August and most likely even more so in September as manufacturing production suggests. However, investment growth most likely did not rebound as expected and inventories must have remained weak as well.

Economic sentiment indicator in October declined but remained higher than a year ago, however, industrial confidence fell slightly below the previous year level. Retail trade confidence worsened significantly, but remained higher than a year ago. However, households became more optimistic.

Outlook: stronger growth ahead

Household consumption will remain one of the main growth drivers, but will ease as real wage bill growth subsides. Capacity utilisation for the industrial sector is record high and growth in main export markets is expected to remain stable while negative effect due to Russian crisis fades away. Therefore we expect investment to recover and export growth to continue. We expect GDP growth to accelerate to 3% in 2017.

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

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