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Lithuania GDP Q4 2023

Lithuania: Economy rebounds in Q4

A second release showed that seasonally and calendar-adjusted GDP rose 0.2% year on year in Q4, above Q3’s downwardly revised flat reading but below the 0.3% expansion reported in the flash release. On a seasonally adjusted quarter-on-quarter basis, economic activity contracted 0.1% in Q4, following the previous quarter’s flat reading. In turn, the economy declined by 0.3% in 2023 as a whole, marking the worst result since 2009.

Looking at the details of the release, household spending largely drove Q4’s rebound, growing 0.8% year on year—which marked the best reading since Q2 2022 (Q3: -1.7% yoy). Meanwhile, government consumption growth cooled to 0.5% in Q4 (Q3: +0.7% yoy), and fixed investment growth ticked down to 13.3% in Q4, from 13.4% in the prior quarter. On the external front, exports of goods and services declined at a milder pace of 5.8% in Q4 (Q3: -8.3% yoy). Conversely, imports of goods and services slid at a steeper rate of 10.6% in Q4 (Q3: -7.8% yoy).

2024 should see Lithuania’s economy rebound on the back of recovering private spending and stronger public expenditure growth. Nevertheless, exports will post a timid expansion, as external demand remains subdued in the first half of the year, and fixed investment will rise less than in 2023, curbed by still-tight financing conditions. Geopolitical conflicts pose downside risks.

Analysts at the EIU said:

“We forecast that real GDP will post moderate growth of 1.8% in 2024. Although consumer confidence is strengthening after wage growth turned positive, household spending will remain weak, weighing on headline growth in 2024. Accommodative fiscal policy, rising public-sector wages and improving external conditions will support growth later in 2024.”

Analysts at SEB commented on the outlook:

“The economy is projected to rebound in 2024, albeit moderately, fueled by a recovery in household consumption. Government investments will also support growth, while exports will stagnate due to weak external demand. The situation in the labour market will deteriorate somewhat further. Fiscal policy will be expansionary in 2024. This year’s presidential and parliamentary elections will probably impede the constructive adoption of necessary but unpopular laws.”

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