Lithuanian GDP grew an unadjusted 1.8% y/y in the second quarter of 2016, according to a first estimate released by Statistics Lithuania on July 29.
The reading marks a slowdown of economic growth compared to a revised 2.4% for the first quarter. It is the first time growth has slowed since the first quarter of 2015, ending an encouraging trend suggesting a robust recovery. Domestic demand remains largely on its own in the driving seat, while the slowdown appears to be the result of deteriorating exports in the oil sector.
In quarterly terms, GDP grew an unadjusted 7.6%. In adjusted terms, GDP grew 2% on the year and 0.1% q/q.
GDP growth in the second quarter was mainly driven by wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, accommodation and food service as well as manufacturing, Statistics Lithuania noted.
“Growth was driven by domestic demand, as retail trade growth remained rather high in the second quarter," Swedbank notes. "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.”
The bank’s analysts have now reduced their expectations for economic growth in 2016 to below 3%, even if the slowdown in the second quarter was “probably temporary”.
“Export growth of Lithuanian origin goods, except for mineral fuels, did not slow down. However, this year’s GDP growth most likely will be below 3%, but it will accelerate somewhat next year,” Swedbank writes.