GDP increased by 2.2% in 2016
economy surprised on the upside in the fourth quarter of last year as GDP picked
up by 3%, in annual terms. Quarterly seasonally adjusted growth accelerated from 0.4% in the third
quarter to 1.3% in the fourth quarter. GDP increased by 2.2% in 2016.
last year was mostly driven by household consumption as retail trade increased
by 6.9%, with acceleration towards the end of the year. It is likely that investments
picked up as well and inventories no longer contributed negatively to GDP
growth in the last quarter of 2016. Exports of goods were negatively affected
by bad harvests and thus shrinking exports of grain and oil seeds. However, exports
of goods could have recovered towards the end of last year as indicated by
stronger manufacturing performance. Exports of services surprised on the upside
last year, expanding by 12% over 11 months of last year (in nominal terms),
compared to the same period a year ago.
the end of last year the seasonally adjusted economic sentiment indicator reached
the highest level since the start of 2008. Economic sentiment improved further
in January with largest increases in industry and construction confidence.
Retail trade confidence continued to worsen and was significantly lower than a
year ago. Household’s optimism, which increased after the parliamentary
election in October, has returned to normal – in January consumer confidence was at the same level as a year ago.
Outlook: stronger growth ahead
We expect economic growth to
accelerate to 2.8% this year, before easing to 2.5% in 2018. Even though growth
in exports and investments is expected to pick up this year, household
consumption will remain the main driver of growth. However, growth in household
consumption will ease as real wage bill growth subsides. Investment growth will
strengthen thanks mainly to rising public investments, but also due to faster
distribution of EU funds.
more information about this report, please contact Mrs. Laura Galdikienė, +370 5 258 2275, Laura.Galdikiene@swedbank.lt
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