Lithuania GDP Q4 2016


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.

The Central Bank expects GDP to grow 2.4% in 2017. FocusEconomics Consensus Forecast panelists see the economy growing 2.7% in 2017, which is unchanged from last month’s estimate. In 2018, the panel expects GDP to expand 2.9%.

Author: Ricard Torné, Lead Economist

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Lithuania GDP Chart

Lithuania GDP Q4 2016 0

Note: Year-on-year changes of GDP in %.
Source: Statistics Lithuania and FocusEconomics Consensus Forecast.

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