Lithuania: Economy rebounds in the second quarter
GDP bounced back in the second quarter, increasing 1.0% on a seasonally and calendar-adjusted annual basis (Q1: -2.6% year on year s.a.).
On the domestic front, the improvement was spearheaded by fixed investment, which grew at a stronger rate of 9.0% year on year in Q2 (Q1: +8.0% yoy s.a.). In contrast, household spending slid at a sharper 1.8% year on year in Q2, following a 1.7% contraction in Q1. Lastly, government spending flatlined (Q1: +0.5% yoy).
On the external front, exports of goods and services increased 1.4% on an annual basis in the second quarter, which contrasted the first quarter’s 5.3% contraction and supported the overall expansion. In addition, imports of goods and services declined at a softer pace of 2.2% in Q2 (Q1: -4.7% yoy).
On a seasonally and calendar-adjusted quarter-on-quarter basis, GDP also rebounded, expanding 2.9% in Q2, contrasting the previous quarter’s 2.1% fall. Q2’s reading marked the best result since Q3 2020.
Looking ahead, our panel sees the economy growing at a muted pace in H2. Domestic demand and exports will remain subdued for the remainder of the year due to the ECB’s recent monetary policy tightening, above-target inflation and sluggish activity among key trading partners. That said, positive migration trends and a stronger fiscal impulse compared to last year will cushion activity somewhat. Further spillovers from the war in Ukraine and spikes in European energy prices this winter pose risks to the outlook.