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Lithuania Economic Forecast

Lithuania Economic Outlook

Early estimates revealed that GDP rebounded year on year in Q2. Absent a detailed breakdown, inflation dropped sharply through the quarter, alleviating some of the pressure on household spending. In Q3, our panel anticipates GDP flatlining. In July, sentiment in the retail, services and construction sectors fell from Q2’s average, while employment expectations eased to the lowest level since June 2020. That said, harmonized inflation fell to a near two-year low in July, while producer prices declined further year on year. In other news, on 3 August, Lithuania signed an agreement with Estonia and Latvia to synchronize the Baltic electricity grid with the EU-operated system by early 2025—sooner than previously planned—disconnecting from the Russia-controlled network of CIS countries. The move bodes well for energy security, investment and the green transition.

Lithuania Inflation

In July, harmonized inflation fell to a 22-month low of 7.2% (June: 8.2%). The moderation was largely due to a sharp drop in price pressures for housing and utilities. Average inflation will ease this year from last year’s level thanks to tighter monetary conditions and softer domestic demand. A potential spike in energy prices poses an upside risk.

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

Lithuania Economic Data

2018 2019 2020 2021 2022
Population (million) 2.8 2.8 2.8 2.8 2.8
GDP (USD bn) 53.7 54.8 56.8 66.4 70.2
GDP per capita (USD) 19,165 19,597 20,324 23,699 24,922
GDP (EUR bn) 45.5 48.9 49.8 56.2 66.8
GDP per capita (EUR) 16,244 17,508 17,828 20,048 23,710
Economic Growth (Nominal GDP, ann. var. %) 7.9 7.5 1.6 12.8 19.3
Economic Growth (GDP, ann. var. %) 4.0 4.6 0.1 5.9 1.9
Domestic Demand (ann. var. %) 3.4 1.3 -4.0 7.3 1.4
Private Consumption (ann. var. %) 3.6 2.7 -2.4 8.0 0.5
Government Consumption (ann. var. %) 0.2 -0.3 -1.4 0.9 0.5
Fixed Investment (ann. var. %) 10.3 6.6 -0.6 7.9 2.6
Exports (G&S, ann. var. %) 7.8 9.6 -0.4 17.8 11.9
Imports (G&S, ann. var. %) 6.9 5.7 -5.5 20.8 12.4
Industrial Production (ann. var. %) 5.6 3.3 -1.3 19.4 10.3
Retail Sales (ann. var. %) 6.5 5.5 2.9 12.9 1.6
Wages (ann. var. %) 9.9 40.2 10.1 10.5 13.3
Unemployment (% of active population, eop) 6.0 6.9 8.1 6.5 6.1
Unemployment (% of active population, aop) 6.2 6.3 8.5 7.2 6.0
Fiscal Balance (% of GDP) 0.5 0.5 -6.5 -1.2 -0.6
Public Debt (% of GDP) 33.7 35.8 46.3 43.7 38.4
Money (ann. var. of M2 %) 11.4 10.4 32.1 13.5 11.7
Inflation (CPI, ann. var. %, eop) 1.9 2.7 0.2 10.6 21.7
Inflation (HICP, ann. var. %, eop) 1.8 2.7 -0.1 10.7 20.0
Inflation (HICP, ann. var. %, aop) 2.5 2.2 1.1 4.6 18.9
Inflation (PPI, ann. var. %, aop) 5.6 -0.1 -8.9 9.5 25.9
ECB Refinancing Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
10-Year Bond Yield (%, eop) 0.31 0.31 0.16 0.16 2.88
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Current Account Balance (EUR bn) 0.1 1.7 3.6 0.6 -3.4
Current Account Balance (% of GDP) 0.3 3.5 7.3 1.1 -5.1
Merchandise Trade Balance (EUR bn) -2.8 -2.3 -0.4 -2.9 -7.3
Merchandise Exports (EUR bn) 24.6 26.0 25.5 31.6 41.1
Merchandise Imports (EUR bn) 27.4 28.3 25.9 34.5 48.4
Merchandise Exports (ann. var. %) 7.9 5.7 -1.6 23.9 29.8
Merchandise Imports (ann. var. %) 10.4 3.3 -8.3 33.2 40.2
Foreign Direct Investment (EUR bn) 0.9 2.7 2.9 2.5 2.0

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