Flash comment: Lithuania - April 30, 2018
GDP expands by 3.6% in the first quarter
In the first quarter of this year real GDP increased by 3.6%, in annual terms. In quarterly terms GDP grew by 0.8% (season and working-day adjusted).


Strong growth is supported by solid retail growth, which accelerated to 6.7% in the 1st quarter. Retail sale of food grew at an impressive rate of 11.2% in the beginning of the year. Increase in social benefits, rising wages of lower income employees definitely contributed to this, also the timing of Easter this year could have boosted the results of the first quarter food sales. On the other hand, the growth in retail sale of non-food products decelerated to 1.9% which was probably related to slower growth in residential real estate market. Meanwhile manufacturing growth decelerated to 5.5% annually, but mainly due to weaker production of oil products. Excluding refined petroleum manufacturing grew at nearly 7%.



Outlook: growth to slow down slightly


The economy continues to grow at an accelerated pace but is expected to slow slightly further into the year - we expect economy to grow 3.2% in 2018. Total economic sentiment reached 10 which is high point  not seen since 2007, confidence strengthening is observed across all sectors. However, it will be difficult to repeat pace of growth achieved last year.


Export growth is showing signs of slow down due to base effects, deteriorating competitiveness is likely to dampen export growth as well. Household consumption is set to rise at a similar pace as last year. Rising incomes and benefits will increase the purchasing power of consumers, but negative demographic trends will put a cap on growth. We expect faster investment growth due to capacity constraints and tight labour market, investments will be further supported by faster EU fund allocation.

 


For more information about this report, please contact Mr. Vytenis Šimkus, +370 5 258 5163, vytenis.simkus@swedbank.lt

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