Lithuanian GDP growth disappoints as it slows to 1.7% in Q3

Lithuanian GDP growth disappoints as it slows to 1.7% in Q3
By bne IntelliNews October 31, 2016

Lithuanian GDP grew an unadjusted 1.7% y/y in the third quarter of 2016, according to a first estimate released by Statistics Lithuania on October 31.

The reading marks a slowdown in economic growth compared to a revised 1.9% for the second quarter. It is the second time growth has slowed since the first quarter of 2015, ending an encouraging trend suggesting a robust recovery could be on the cards, and leaving the 2.4% gain recorded in first quarter of this year looking like a peak. 

Growth in the third quarter was mainly driven by manufacturing, wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, accommodation and food services, Statistics Lithuania notes. The performance of the agricultural sector put a significant brake on growth, despite the high season.

In quarterly terms, GDP grew an unadjusted 9.7%. In adjusted terms, GDP grew 1.6% on the year and 0.1% q/q. A more detailed estimate of GDP growth in the third quarter will be published on November 30.

For Swedbank, the growth figure was ua disappointment. "Retail trade growth did not subside in the third quarter and export performance also improved in August and most likely even more so in September as manufacturing production suggests," the bank's analysts write. "However, investment growth most likely did not rebound as expected and inventories must have remained weak as well."

They maintain an optimistic outlook, however. "Household consumption will remain one of the main growth drivers, but will ease as real wage bill growth subsides. Capacity utilisation for the industrial sector is record high and growth in main export markets is expected to remain stable while the negative effect due to the Russian crisis fades away," Swedbank notes.

Investment is likely to recover and export growth continue, they conclude. The analysts expect GDP growth to accelerate to 3% in 2017.