Lithuania: Economy shows resilience on the back of strong private consumption
August 30, 2011
In the second quarter, GDP grew 6.3% over the same period last year. The result was below the 6.9% expansion recorded in the first quarter but overshot the 6.1% increase reported in the 28 July flash estimate. Moreover, the 6.3% expansion represented the fifth consecutive quarter of positive economic growth after GDP had contracted for six straight quarters through to March 2010. The main driver behind the strong second quarter reading was private consumption, which accelerated from a 5.5% increase in the first quarter to a 6.7% expansion in the second, while public spending moderated (Q1: +1.1% year-on-year; Q2: +0.8% yoy). Fixed investment slowed after the stellar 41.0% growth tallied in the previous quarter but rose a still strong 23.1%. The net contribution from the external sector to overall economic growth continued to improve compared with the previous quarter. Exports of goods and services expanded 14.6% year-on-year (Q1: +25.2% yoy), while imports climbed 16.2% (Q1: +28.1% yoy). As a result, the net contribution from the external sector stepped up from minus 3.5 percentage points in the first quarter to minus 2.1 percentage points in the second. At the sector level the second quarter expansion was driven by a strong performance in the services sector (Q1: +6.0% yoy; Q2: +6.2% yoy). On the other hand, industry slowed from an 11.2% expansion to a 9.3% rise in the second quarter, while agriculture contracted 1.7% (Q1: +3.1% yoy). A quarter-on-quarter analysis corroborates the moderation suggested in the annual reading, as the economy expanded a seasonally and working-day adjusted 0.4% over the previous quarter (Q1: +3.5% quarter-on-quarter). The Central Bank has raised its 2011 growth forecast from 5.6% in May to 6.2% in August. Meanwhile, the Central Bank left its 2012 projection unchanged at 4.8%.