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Lithuania GDP Q3 2022

Lithuania: GDP growth accelerates in the third quarter, posts only expansion in the Baltic

GDP growth accelerated to 2.0% year on year in the third quarter, from 1.7% in the second quarter. Lithuania posted the only economic expansion in the Baltic region in the quarter, thanks to a rebound in investment and stronger exports growth, which offset otherwise moribund domestic activity.

Domestically, a rebound in fixed investment—a 2.6% expansion in Q3, up from a 0.5% contraction in Q2—spearheaded the increase. In contrast, household spending contracted 1.9% in Q3 (Q2: +0.4% yoy), hindered by one of the highest inflation rates in the Eurozone and deeply entrenched consumer pessimism. Public spending, meanwhile, contracted 0.5% (Q2: +1.1% yoy).

On the external front, exports of goods and services growth sped up to 13.0% in Q3 (Q2: +8.2% yoy). Similarly, imports of goods and services growth picked up to 10.4% in Q3 (Q2: +7.4% yoy).

Meanwhile, underlying momentum strengthened: On a seasonally adjusted quarter-on-quarter basis, economic growth accelerated to 0.5% in Q3, compared to the previous quarter’s 0.3% expansion.

Looking ahead, economic growth should weaken from its current level in the upcoming quarters. Elevated energy prices are set to crunch household budgets, while tighter monetary conditions likely hamper private-sector activity growth. In addition, an EU-wide slowdown should further weigh on trade, exacerbating the losses logged from the sanctions against Russia and Belarus. That said, Lithuania’s economy will outpace its recession-ridden regional peers in the Baltics, partially as a result of newly approved energy price subsidies for households—in place from H1 2023.

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