Lithuania: Second estimate confirms a marked deceleration in growth in Q3
November 30, 2018
According to detailed data released by the Statistical Institute on 30 November, the economy expanded 2.4% in annual terms in the third quarter (previously reported: +2.2% year-on-year), down from the second quarter’s 3.8% year-on-year increase. The deceleration was largely driven by weaker external sector metrics. At an industry level, subdued growth in the agricultural sector—owing to lower crop yields—drove the slowdown.
Domestic demand softened somewhat in Q3, but remained healthy, nonetheless. Fixed investment growth edged down in the quarter (Q3: +7.0% yoy; Q2: +7.2% yoy), while household consumption growth ticked up to 4.6% annually (Q2: +4.5% yoy), aided by moderating inflationary pressures and a tight labor market. Lastly, government consumption recorded the first annual drop so far this year (Q3: -0.2% yoy; Q3: +0.1% yoy).
External sector conditions, meanwhile, were more challenging in the third quarter and weighed on overall GDP growth. Annual exports decelerated to a three-year low of 0.4% in Q3 from a healthy 4.0% increase in Q2 amid plummeting services exports, largely due to a marked deterioration in the transport and logistics sector which accounts for over half of Lithuania’s services exports. Meanwhile, imports fell 0.3% in annual terms in the third quarter (Q2: +3.0% yoy), marking the first contraction since Q1 2014.
On a quarter-on-quarter basis, growth sliped into negative territory in Q3, coming in at -0.3% in seasonally-adjusted terms. The result marked the first quarterly contraction in eight years and contrasted the healthy 0.9% increase in the previous quarter.
Author: Almanas Stanapedis, Economist