Lithuania: Growth slumps to over three-year low in Q1 as Covid-19 begins to bite
April 30, 2020
GDP rose 2.6% in year-on-year terms in Q1 2020, according to preliminary national accounts data released by Lithuania’s Statistical Institute on 30 April. The reading represented a sharp slowdown from the fourth quarter’s 3.8% growth and marked the slowest expansion since Q3 2016. According to the government’s estimates, the economy lost around 1.5% of GDP in Q1 due to the economic fallout from Covid-19, with the industrial, construction, wholesale and retail trade, and services sectors all heavily affected.
Meanwhile, in seasonally- and working day-adjusted quarter-on-quarter terms, the economy contracted 0.2% in Q1 2020, swinging from a robust 1.1% expansion in Q4 (previously reported: +1.3 seasonally-adjusted, month-on-month), marking the first decline since Q4 2009.
The economy is set to contract sharply this year as the pandemic weighs on domestic and external economic activity. The fallout could lead to a prolonged recession if the global pandemic is not contained in the months ahead, as exports likely slump, investment activity dries up and consumer demand falters. On a more positive note, a jump in public spending should soften the downturn. In March, the government announced a EUR 5.0 billion economic stimulus package, which includes higher public investment, improving business liquidity and personal income protection measures.
Author: Almanas Stanapedis, Economist