Strong growth continues: GDP up by 3.9% in Q2
Lithuanian government and the businesses can relax for now and enjoy their summer vacation
– the Lithuanian economy continues growing at an accelerated pace. The
Lithuanian GDP increased by 3.9% in Q2 of this year, compared to the same period a year ago. Meanwhile,
in quarterly terms, the seasonally adjusted GDP increased by 0.6%. The annual
growth for Q1 was revised up by 0.2 pp to 4.1%.
export growth supported by strong foreign demand has been the surprise story of
this year. The nominal exports of goods and services continued growing by
double digits (in annual terms) in May-June and were supportive of economic
growth. Investment goods as well as intermediate consumption goods contributed
most to nominal growth of goods exports, although traditional lower value-added
products, such as dairy products, also started showing signs of more rapid
to impressive export performance, the manufacturing industry has been operating
at full speed (6.7% in Q2, YoY) - capacity utilization stood at the highest
level in country’s history at the start of Q3. Annual growth in investment
probably strengthened, as companies most likely had no more excuses in delaying
it. It is likely that a more rapid distribution of EU funds also provided the
necessary boost to investment growth.
consumption growth was supported by robust growth in wages and household
lending. Although, as indicated by weaker growth in retail trade (4.7% in Q2,
YoY), growth in household consumption could have eased somewhat in Q2. Growth
in retail trade of food products, beverages and tobacco products has been
stagnant this year, most likely due to shrinking population and changing
consumption patterns, thus growth in retail trade was supported only by sales
of non-food products.
Outlook: strong growth but for how long?
expect economic growth to remain strong throughout this year.
Investment growth will strengthen thanks mainly to rising public investments,
but also due to faster distribution of EU funds. Meanwhile, exports are
expected to stay strong due to improving economic outlook in the main export
markets. Household consumption growth will be supported by growing wages and
lending, but shrinking employment will be a dampening factor.
will revise our forecasts at the end of August. Stay tuned.
more information about this report, please contact Mrs. Laura Galdikienė, +370
5 258 2275, Laura.Galdikiene@swedbank.lt
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