Lithuania: Economy grows at fastest pace in more than two years
February 28, 2011
In the fourth quarter, GDP grew 4.8% over the same period last year. The result was above the 1.2% expansion recorded in the third quarter and exceeded the 4.6% rise reported in the 28 January flash estimate. Moreover, the fourth quarter figure marks the strongest reading since the third quarter of 2008, which can be partly attributed to the low comparison base, since the economy contracted a severe 14.5% in the final quarter of 2009. The domestic sector was the driver of the strong fourth quarter reading. Private consumption swung from a 2.7% contraction in the third quarter to a 3.3% expansion in the fourth, while fixed investment rose 13.9%, slightly below the 15.0% expansion recorded in the third quarter but marking the second positive quarterly reading after declining for eight consecutive quarters. In contrast, the net contribution from the external sector to overall economic growth deteriorated over the previous quarter, as imports rose more than exports. Exports of goods and services expanded 17.9% year-on-year (Q3: +19.6% yoy), while imports expanded 31.3% (Q3: +19.4% yoy). As a result, the net contribution from the external sector to overall growth dropped from minus 0.9 percentage points in the third quarter to minus 9.7 percentage points in the third. At the sector level the fourth quarter expansion was driven by better performances in industry (Q3: +5.5% yoy; Q4: +12.2% yoy) and agriculture (Q3: -7.5% yoy; Q4: +0.3% yoy), while services mirrored the previous quarter (Q3: +2.5% yoy; Q4: + 2.5% yoy) A quarter-on-quarter analysis corroborates the positive annual reading, as the economy expanded a seasonally adjusted 1.8% over the previous quarter, which was well above the 0.3% quarter-on-quarter increase recorded in the third quarter. More recent economic information points to a continuation of the positive growth momentum in the first quarter of the year, as industrial production continues to expand at a double-digit rate. In January, industrial production jumped 17.2% over the same month last year, which was above the already robust 15.5% print posted in December. On a full-year basis, the economy expanded 1.3% in 2010, marking a first - albeit timid - step towards recovery, following the 14.7% contraction recorded in 2009. The Central Bank sees the economy growing 3.3% this year, before accelerating to 4.1% in 2012.
Author: Armando Ciccarelli, Head of Data Solutions