Lithuania: Economy continues to recover at moderate pace
November 26, 2010
In the third quarter, gross domestic product (GDP) grew 1.1% over the same period last year. The result repeated the 1.1% expansion recorded in the second quarter but exceeded the 0.6% rise reported in the 28 October flash estimate. The third quarter figure marked the second consecutive quarter of positive growth after six consecutive quarters of contraction. The domestic sector remained a strong growth driver in the third quarter. Private consumption jumped from an 8.2% contraction in the second quarter to a 0.9% drop in the third. Meanwhile, investment soared 15.0%, contrasting the 5.5% contraction recorded in the second quarter and marking the first positive reading after eight consecutive quarters of decline. In contrast, the net contribution from the external sector to overall economic growth deteriorated over the previous quarter, as imports rose more than exports. Exports of goods and services expanded 14.6% year-on-year, which was down from the 21.3% rise recorded in the second quarter, while imports expanded 20.2%, up from the 15.6% increase in the second quarter. As a result, the net contribution from the external sector to overall growth dropped from plus 2.2 percentage points in the second quarter to minus 4.6 percentage points in the third. At the sector level the third quarter expansion was driven by better performances in industry (Q2: +2.4% yoy; Q3: +5.4% yoy) and services (Q2: +0.5% yoy; Q3: +2.7% yoy). Agriculture, in contrast, deteriorated strongly compared to the previous quarter (Q2: +2.3% yoy; Q3: -10.5% yoy). A quarter-on-quarter analysis corroborates the positive annual reading, as the economy expanded a seasonally adjusted 0.5% over the previous quarter, which followed on the 0.6% quarter-on-quarter increase recorded in the second quarter. In its November Economic Outlook report, the Central Bank expects the economy to grow 0.5% in 2010. In 2011, the Central Bank sees the economy growing 3.1%.
Author: Armando Ciccarelli, Head of Data Solutions