Lithuania Merchandise Imports (EUR bn)

A second release confirmed that the economy contracted year on year in Q4. A deeper downturn in private spending than in the previous quarter weighed on the reading, as elevated inflation and a slightly higher unemployment rate eroded purchasing power. Additionally, exports growth slowed to the lowest rate since Q3 2020 on softening EU demand. More positively, fixed investment growth accelerated, lending support to activity. Turning to Q1, the economy is likely sliding into a deeper contraction. In January, industrial output fell at a faster rate than Q4’s average, with a slump in manufacturing deepening from the previous quarter, while merchandise exports declined in the same month. More positively, January’s rebound in retail sales points to a recovery in private spending despite a higher unemployment rate.