Flash Comment: Lithuania - October 28, 2011: Rapid Lithuania's economy recovery will slightly slow down in forthcoming quarters

1. Flash comment
Economic commentary by Economic Research Department October 28, 2011
Rapid Lithuania's economy recovery will slightly slow down in
forthcoming quarters
Economic Growth, yoy In the 3Q 2011 Lithuania’s economy growth was in line with our
12% expectation and according to the preliminary data reached 6.6%
9% yoy (1.3% qoq s.a.). GDP in current prices totalled EUR 8.1bn and
6% GDP per person was EUR 9,180 over 12 months. During the first
3% nine months economy demonstrated the solid 6.3% growth.
0%
-3% The growth of economy is increasingly influenced by business
-6% investments and private consumption which contributed to
-9%
sustainable growth of economy this year. In 3Q alone retail trade
-12%
-15%
volumes (excl. motor vehicles) went up by 9.5% yoy. More rapid
-18% recovery of consumption was predetermined by rising employment
2007 2008 2009 2010 2011 level, weakening job loss worries, reducing savings and growing
Source: Statistics Lithuania demand for goods and services that were postpone during crisis,
albeit slow growth of average wage. Retail trade growth was
Industrial production and retail trade positively affected by the European Basketball Championship held
(excl. motor vehicles), growth yoy
in Lithuania in August. The rates of growth of industry – the main
20%
driver of the previous quarters – reduced to 6.9%.
10%
Eliminating the impact of prices and seasonal factors, GDP of
0% Lithuania in 3Q of this year was just a bit higher than in end-2006
which means that economy of Lithuania has not yet reached the
-10%
pre-crisis level and will need at least a couple of years to recover.
-20%
-30%
Outlook
2007 2008 2009 2010 2011 The period of rapid economic recovery, however, is coming to end
Industrial production
Retail trade (excl. motor vehicles)
and from now on the rates of growth of economy will be slowing
Source: Statistics Lithuania down. It is also signalled by the economic sentiment indicator,
which has been reflecting weakening business growth expectations
Confidence Indicators
already for three months mainly due to negative expectations
60 emanating from persisting uncertainties in Euro area and debt
40
crisis. It means that companies might defer investment decisions
20
0 for some time. It also worsens expectations of households reducing
-20 consumption that has started to recover.
-40
-60 We forecast that in 4Q of this year the Lithuania’s economy will
-80 grow slightly less than in 3Q and annual growth will be 6.3%. Next
-100 year economy will step into the phase of lower growth which
2007 2008 2009 2010 2011 according to our forecasts will be 4.2%.
Overall sentim ent Indus try
Construction
Services
Retail trade
Consumer
Lina Vrubliauskiene
Source: Statistics Lithuania Senior Economist
+ 370 5 258 2275
lina.vrubliauskiene@swedbank.lt
Swedbank Economic Research Department Flash comment is published as a service to our customers. We believe that we have used
reliable sources and methods in the preparation of the analyses reported in this publication.
SE-105 34 Stockholm, Sweden
However, we cannot guarantee the accuracy or completeness of the report and cannot be
ek.sekr@swedbank.com
held responsible for any error or omission in the underlying material or its use. Readers are
www.swedbank.com
encouraged to base any (investment) decisions on other material as well. Neither
Swedbank nor its employees may be held responsible for losses or damages, direct or
Legally responsible publisher
indirect, owing to any errors or omissions in Flash comment.
Cecilia Hermansson, +46 8 5859 7720