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Lithuania Economic Forecast

Lithuania Economic Outlook

After declining in Q4 2022, the economy likely weakened further in Q1. In January–March, industrial output fell at a notably faster rate than Q4’s average, with March’s figure slumping to a near 11-year low. In January–March, retail sales continued to fall on average and economic sentiment deteriorated. Coupled with the highest unemployment rate since January 2022 in the first two months of the year, this bodes ill for spending and investment. The external sector also weakened in January–February, with exports growing at a slower pace than in Q4 and imports growth cooling significantly from the prior quarter. Meanwhile, the Ministry of Finance recently unveiled plans for a tax reform envisioning additional personal income tax for high earners, corporate income tax breaks for SMEs and higher social security contributions for the self-employed. The initiative followed an earlier proposal for a temporary windfall tax on the banking sector.

Lithuania Inflation

Harmonized inflation eased for the sixth consecutive month to 15.2% from 17.2% in February. Our panel projects price pressures to nearly halve in 2023 on waning domestic demand, lower commodity prices and higher interest rates. Energy price spikes and stronger-than-expected economic activity pose upside risks to the outlook.

This chart displays Economic Growth (GDP, annual variation in %) for Lithuania from 2013 to 2022.

Lithuania Economic Data

2017 2018 2019 2020 2021
Population (million) 2.8 2.8 2.8 2.8 2.8
GDP (USD bn) 47.7 53.7 54.8 56.8 66.4
GDP per capita (USD) 16,856 19,165 19,597 20,324 23,699
GDP (EUR bn) 42.3 45.5 48.9 49.8 56.2
GDP per capita (EUR) 14,949.2 16,243.8 17,507.6 17,828.0 20,047.7
Economic Growth (Nominal GDP, ann. var. %) 8.7 7.9 7.5 1.6 12.8
Economic Growth (GDP, ann. var. %) 4.3 4.0 4.6 0.1 5.9
Domestic Demand (ann. var. %) 2.6 3.4 1.3 -4.0 7.3
Private Consumption (ann. var. %) 3.6 3.6 2.7 -2.4 8.0
Government Consumption (ann. var. %) -0.3 0.2 -0.3 -1.4 0.9
Fixed Investment (ann. var. %) 8.9 10.0 6.6 -0.2 7.8
Exports (G&S, ann. var. %) 13.5 6.8 10.1 0.4 17.0
Imports (G&S, ann. var. %) 11.1 6.0 6.0 -4.5 19.9
Industrial Production (ann. var. %) 6.9 5.6 3.3 -1.3 19.4
Retail Sales (ann. var. %) 4.5 6.5 5.5 2.9 12.9
Wages (ann. var. %) 8.2 9.9 40.2 10.1 10.5
Unemployment (% of active population, aop) 7.1 6.2 6.3 8.5 7.2
Fiscal Balance (% of GDP) 0.4 0.5 0.5 -6.5 -1.2
Public Debt (% of GDP) 39.1 33.7 35.8 46.3 43.7
Money (ann. var. of M2 %) 5.9 11.4 10.4 32.1 13.5
Inflation (CPI, ann. var. %, eop) 3.9 1.9 2.7 0.2 10.6
Inflation (HICP, ann. var. %, eop) 3.8 1.8 2.7 -0.1 10.7
Inflation (HICP, ann. var. %, aop) 3.7 2.5 2.2 1.1 4.6
Inflation (PPI, ann. var. %, aop) 5.1 5.6 -0.1 -8.9 9.5
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 0.00
10-Year Bond Yield (%, eop) 0.31 0.31 0.31 0.16 0.16
Exchange Rate (USD per EUR, eop) 1.20 1.14 1.12 1.22 1.14
Exchange Rate (USD per EUR, aop) 1.13 1.18 1.12 1.14 1.18
Current Account Balance (EUR bn) 0.2 0.1 1.7 3.6 0.6
Current Account Balance (% of GDP) 0.5 0.3 3.5 7.3 1.1
Merchandise Trade Balance (EUR bn) -2.1 -2.8 -2.3 -0.4 -2.9
Merchandise Exports (EUR bn) 22.8 24.6 26.0 25.5 31.6
Merchandise Imports (EUR bn) 24.8 27.4 28.3 25.9 34.5
Merchandise Exports (ann. var. %) 16.9 7.9 5.7 -1.6 23.9
Merchandise Imports (ann. var. %) 16.2 10.4 3.3 -8.3 33.2
Foreign Direct Investment (EUR bn) 0.9 0.9 2.7 2.9 1.8

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