Lithuanian GDP grew an adjusted 4.1% y/y in the first quarter of 2017, according to a flash estimate released by Statistics Lithuania on April 28.

The reading marks a significant acceleration on the revised 3.1% growth seen in the final quarter 2016, and pushes the country's economy onto a much steeper growth trajectory than seen in recent quarters. Growth has barely exceeded 2% over the past couple of years. Analysts predict growth will remain strong throughout the rest of the year.

In quarterly terms, GDP grew an adjusted 1.4%, much faster than the 0.8% recorded in the fourth quarter of last year. In unadjusted terms, GDP grew 3.8% on the year, but fell 8.8% in quarterly terms.

The annual growth in January-March was mainly driven by household consumption. Analysts at Swedbank note the “robust developments in retail trade and household lending”.

Annual growth in investment probably strengthened, not least due to the base effects, but also possibly due to distribution of EU funds finally picking up, Swedbank adds. An acceleration of investment is expected to help economic growth remain strong in 2017.

Exports also showed signs of recovery, supported by strong performance in the manufacturing segment. Exports are expected to stay strong due to an improving economic outlook in the main export markets.

Meanwhile, the effect factors that have been dampening growth, such as last year’s poor grain harvests, is forecast to gradually ease. "However, growth in household consumption is expected to decelerate as the real wage growth subsides,” Swedbank adds.