Lithuanian GDP growth slowdown to 1.7% y/y confirmed

Lithuanian GDP growth slowdown to 1.7% y/y confirmed
By bne IntelliNews November 30, 2016

Lithuanian GDP grew an unadjusted 1.7% y/y in the third quarter of 2016, according to a second estimate released by Statistics Lithuania on November 30.

The reading confirms the first estimate released lasat month, and 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 that had suggested a robust recovery could be on the cards. The 2.4% gain recorded in first quarter of this year now looks to be 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 construction, agricultural, and forestry and fishing sectors proved a brake.

Household consumption expenditure grew 1.4% and general government expenditure 0.2%. Exports expanded 0.9%. Investment however dwindled 3.6%, in line with expectations.

In quarterly terms, GDP grew an unadjusted 9.8%. In adjusted terms, GDP grew 1.7% on the year and just 0.1% q/q.
Despite growth slowing, analysts maintain an optimistic outlook. "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 at a record high and growth in the main export markets is expected to remain stable while the negative effect due to the Russian crisis fades away," Swedbank noted in comments to the first GDP estimate.

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