Lithuania: Growth slows in Q2 but remains healthy
August 30, 2019
GDP increased 3.9% in year-on-year terms in the second quarter, according to detailed national accounts data released by Lithuania’s Statistical Institute on 30 August. This was down from both the preliminary estimate of a 4.0% expansion and the first quarter’s 4.2% year-on-year expansion. Moreover, in seasonally- and working day-adjusted quarter-on-quarter terms, growth edged down to 0.8% in the second quarter, from 1.2% in the first quarter.
Robust domestic demand continued to spearhead overall growth in the second quarter. Private consumption picked up slightly (Q2: +3.7% year-on-year; Q1: +3.3% yoy) supported by a tighter labor market and rising wages. On top of that, government spending growth crept up in the quarter (Q2: +1.1% yoy; Q1: +1.0% yoy), further shoring up overall consumption growth. Lastly, fixed investment growth remained upbeat in the second quarter (Q2: +8.1% yoy; Q1: +8.4% yoy), reflecting a favorable business environment following the presidential elections.
Externally, the picture was bleaker. Slowing global growth, weakening trade within the Eurozone and Brexit-related uncertainty caused export growth to more than half in the second quarter (Q2: +4.1% yoy; Q1: +9.4% yoy). This, coupled with a pick-up in imports (Q2: +5.1% yoy; Q1: +4.8% yoy), led to a deterioration in the external sector’s contribution to overall growth in the second quarter.
Author: Almanas Stanapedis, Economist