Lithuanian GDP grew an adjusted 3.6% y/y in the fourth quarter of 2017, according to a first estimate released by Statistics Lithuania on January 30.
The reading marks a slowdown of 0.1pp on the revised seasonally- and working-day adjusted growth of 3.7% in the third quarter. The expansion in 2017 came in at adjusted 3.9% overall and 3.8% in unadjusted terms, a much steeper growth trajectory than seen in 2015 and 2016 when growth struggled to exceed 2% y/y.
"Strong performance in the last quarter was mainly supported by rapid export expansion together with recovering investments," Swedbank noted.
"Public investments started to pick up pace after prolonged period of stagnation. It could be that capacity constraints and strong demand finally convinced firms to invest. In addition retail grew at a solid pace of 4.3% in December despite previous weaker performance," it added.
In quarterly terms, GDP grew an adjusted 1.5%, clearly faster than the revised 0.4% quarterly expansion recorded in July-September. In unadjusted terms, GDP grew 3.9% on the year and conracted 3% q/q.
The annual growth in the fourth quarter comes on the back of positive trends sweeping the Lithuanian economy. Wholesale and retail trade, repair, transport and storage of motor vehicles and motorcycles, accommodation and catering services, construction and manufacturing industries, all put in a good performance, Statistics Lithuania said.
Throughout 2017, services, industry and construction sectors contributed to growth the most, while agriculture disappointed.
The outlook for 2018 remains positive, if slightly more conservative than in 2017.
"We expect the economy to expand 3.2% this year. It will be difficult to repeat the surge in exports we observed last year, [as] labour shortages and limited capacity will put a lid on growth. Nevertheless strong household consumption and recovery in investments should compensate for it somewhat," Swedbank wrote.
The detailed note on growth composition in the fourth quarter and in 2017 will be published on March 1.