Still strong growth, but looming risks ahead
expectations, the Lithuanian economy bucked the trend in the first half of 2019
– GDP has increased by 4% (when season and calendar
adjusted) and 4.1% (without the adjustments), compared to the same period a
year ago. Meanwhile, in quarterly terms, seasonally adjusted GDP for Q2 has
increased by 0.8% (revised down from 0.9%).
to the previous quarter, growth was mainly influenced by the increase of
investments, exports and steady household consumption, that grew by 8.1%, 4.1%
and 3.7% respectively when compared to 2018. Consumption remained
the main driver of growth and contributed 2.7pp second quarter annual growth.
Annual growth in manufacturing and exports of goods of
national origin seem still strong but losing the momentum when looking to the
data of the last few months. Value of exports did comprise nearly 92% of
country‘s GDP in June and did reach all-time highs.
Surprisingly, industrial confidence, when compared to July, has increased
by 6% in August.
In annual real terms, retail trade has increased by 4.5% in the second
quarter. Domestic demand is still supported by a solid wage growth and
improving migration trends (net immigration reached 6,000 during the first
seven months of this year). Moreover, Lithuanians’ assessment of current
conditions climbed to the highest level in almost 6 years.
growth to slow down in the second half this year and 2020
We have revised this year’s GDP growth forecast from 3.0% to 3.7%, However,
we think that the German weakness will finally catch up and manufacturing and
export growth could ebb towards the end of this year. Hence, next year is likely
to be much gloomier: GDP growth will probably not exceed 2.0% in 2020 before
rebounding to 2.5% in 2021. The main reason for this notable slowdown is
related to external shocks: weak German manufacturing, disorderly Brexit and
further trade war escalation. However, negative effects will be manageable, as
the economy remains well balanced.
For more information about this report, please contact:
Greta Ilekytė, +370 5258 22 75, firstname.lastname@example.org.
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