Lithuania Government Consumption (ann. var. %)

Economy declines in Q4

According to a preliminary estimate, GDP fell 0.4% year on year in the fourth quarter from a 2.4% expansion in the third quarter. Elevated energy prices likely crunched household budgets, while tighter monetary conditions hampered private sector activity and an EU-wide slowdown should have capped exports growth.

Moreover, underlying momentum deteriorated in the fourth quarter: On a seasonally adjusted quarter-on-quarter basis, GDP registered a drop of 1.7% following the previous period’s 0.4% increase. A comprehensive Q4 GDP data breakdown will be released on 1 March.

Commenting on the outlook, analysts at Swedbank commented:

“Although some of the biggest challenges seem to be behind us, the loss of purchasing power, higher interest rates and weakness in export markets will dent economic activity this year. The good news is that price pressures are ebbing rapidly, and annual inflation is likely to drop close to 2.0% by the end of this year.”