Lithuania: GDP stumbles back to decline in Q4
March 1, 2021
According to a second estimate released on 1 March, GDP slipped 1.0% year-on-year in the fourth quarter of 2020, contrasting the 0.1% uptick tallied in the third quarter. The reading was revised up from the preliminary estimate of a 1.2% contraction. Meanwhile, in seasonally-adjusted quarter-on-quarter terms, GDP dipped 0.2%, swinging back to contraction after it grew at the sharpest pace on record in the third quarter (Q3: +6.1% s.a. qoq). For 2020 overall, the economy shrank 0.8%, contrasting 2019’s 4.3% expansion.
The fourth quarter’s annual downturn came amid a second round of lockdown measures that came into force in November and December to stem the rapid rise of Covid-19 infections. Private consumption growth slowed to 0.6% annually in Q4 from 1.3% in Q3, while government spending swung to decline, falling at the sharpest rate in three years (Q4: -0.5% yoy; Q3: +0.5% yoy). Meanwhile, fixed investment leaped 9.0% year-on-year in the quarter, rebounding robustly from Q3’s 1.7% dip and cushioning the overall downturn to some extent.
On the external front, exports of goods and services lost momentum in Q4, growing a mild 0.3% on an annual basis (Q3: +0.5% yoy). Moreover, imports contracted for the third consecutive quarter, pointing to subdued demand at home (Q4: -1.2% yoy; Q3: -6.3% yoy).
Moving forward to this year, economic output is seen rebounding after slumping for the first time in over a decade in 2020, as domestic and external demand recover from the Covid-19 hit. Inflows of EU funds should boost investment and provide crucial support for growth. Uncertainty over the pandemic’s course and the speediness of vaccine deployment clouds the outlook, however.
Author: Javier Colato, Economist