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Lithuania GDP Q2 2022

Lithuania: GDP growth records slowest increase since Q1 2021 in Q2

As expected by our panelists, economic growth more than halved in Q2 as higher commodity prices stoked inflation and ate into consumers pockets. GDP growth moderated to 1.8% year on year in the second quarter, from 4.8% in the first quarter. Q2’s reading marked the worst reading since Q1 2021.

The downturn was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Household spending growth fell to 0.6% in Q2, marking the weakest expansion since Q1 2021 (Q1: +7.6% yoy). Public consumption growth was the slowest since Q4 2021, expanding 0.4% (Q1: +0.6% yoy). Meanwhile, fixed investment was flat in Q2, down from the 5.4% increase recorded in the prior quarter.

Exports of goods and services growth waned to 8.1% in Q2 (Q1: +19.8% yoy). In addition, imports of goods and services growth dropped to 7.3% in Q2 (Q1: +21.9% yoy), marking the worst reading since Q1 2021.

On a seasonally-adjusted quarter-on-quarter basis, economic activity declined 0.5% in Q2, contrasting the previous period’s 1.2% increase. Q2’s reading marked the sharpest drop since Q2 2020.

Turning to Q3, our Consensus projects the economy will lose further steam. Red-hot inflation—due to surging energy prices—is expected to weigh on household spending. In addition, exports should similarly suffer from a reduction in demand from key trading partners. The war in Ukraine and heightened geopolitical tensions with neighboring Russia and Belarus remain the main upside risks.

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