Flash comment: Lithuania - July 29, 2016
GDP growth slowed down temporary to 1.8% in Q2
According to the flash estimate, annual GDP growth slowed down to 1.8% in the second quarter of this year and was below our expectations. Previous quarter growth was revised up from 2.3% to 2.4%. Quarterly growth decelerated from 0.9% in the first quarter to 0.1% in the second quarter.

 

Growth as expected was driven by domestic demand as retail trade growth remained rather high in the second quarter. However, investments and inventories most likely remained very weak. Moreover, manufacturing and nominal exports contracted in the second quarter due to sharp contraction of refined petroleum products production.

Economic sentiment indicator in July declined and became lower than a year ago for the first time in more than a year. Even though industrial confidence did not decrease, there was a sharp fall in construction confidence while retail and service sectors are not that optimistic as earlier this year as well.


Outlook: stronger growth expected

We expect that this was probably a temporary slowdown as labour market and credit growth for business and households remains strong. Moreover, export growth of Lithuanian origin goods, except for mineral fuels, did not slow down in April and May. However, this year’s GDP growth most likely will be below 3%, but it will accelerate somewhat next year.



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

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