Lithuania: Economy moderates in the last quarter of 2011
February 28, 2012
In the fourth quarter of 2011, GDP grew 4.4% over the same period the previous year. The result was well below the 6.7% expansion recorded in the third quarter, but a notch above the 4.3% increase reported in the 30 January flash estimate. Although the Q4 print was relatively strong, it represents the weakest expansion seen since Q3 2010. In the full year 2011, GDP expanded a robust 5.9% (2010: +1.4% year-on-year), beating the said flash estimate's anticipated 5.8% rise. The moderation seen in the fourth quarter was broad-based, as both external and domestic demand slowed markedly in comparison to the previous quarter. Private consumption grew a strong 8.1% over the same period last year, almost doubling the 4.1% rise observed in the previous quarter, while public spending added 1.3% (Q3: +0.3% yoy). Moreover, gross fixed investment grew 10.4% (Q3: +7.9% yoy). Nevertheless, a sizable destocking process dragged down domestic demand, which decelerated from a 3.4% expansion in the third quarter to a 2.2% increase. The external sector's net contribution to overall economic growth deteriorated from 3.4 percentage points in the third quarter to 1.3 percentage points in the fourth, as exports of goods and services fell from an 11.1% expansion in the third quarter to a 4.9% rise in the fourth. In addition, imports also moderated, growing just 3.3% (Q3: +6.4% yoy). A quarter-on-quarter analysis corroborates the moderation suggested in the annual reading, as the economy rose a seasonally and working-day adjusted 1.0% over the previous quarter, which is below the 1.3% increase recorded in the third quarter. According to its February Outlook on Lithuania's Economy, the Central Bank expects GDP to rise 2.2% this year, which is well below the 3.5% expansion forecasted in November. Next year, the Bank projects the economy to grow 3.3%.