Lithuania: Growth accelerates to over two-year high in Q4
March 1, 2017
Strong wage increases drove the economy to expand 3.0% in annual terms in Q4 (Q3: +1.7% year-on-year), according to detailed data released by the National Statistics Office on 1 March. The result matched the 30 January preliminary estimate and marked the fastest expansion since Q3 2014.
Strong domestic demand underpinned Q4’s sharp acceleration as a tight labor market and hikes in the minimum wage bolstered household spending (Q3: +5.0% yoy; Q4: +5.8% yoy). Moreover, negative spillovers stemming from reduced EU funding started to ease, prompting gross fixed investment to rebound and expand 5.7% (Q3: -5.1% yoy). Growth in government spending steadied at 1.5% in Q4 (Q3: +1.4% yoy).
On the external side of the economy, robust domestic demand and rising commodity prices propelled imports of goods and services (Q3: +0.2% yoy; Q4: +3.3% yoy). A pickup in global demand caused exports to accelerate 1.1% (Q3: +0.7% yoy). As a result, the net contribution of the external sector to overall growth plummeted from plus 0.4 percentage points in the third quarter to minus 1.8 percentage points in the fourth quarter.
On a quarter-on-quarter basis, GDP grew a seasonally and working-day adjusted 1.3% in Q4, which marked an improvement from the 0.4% expansion seen in Q3 and was the strongest reading since Q3 2013.