Projections of Lithuanian Economic Indicators (September 2010)

According to the data by Statistics Lithuania, in the 2nd quarter of 2010 gross domestic product grew by 1.3 per cent, as compared with the same quarter of 2009, – it shows that GDP develops in line with the central scenario by the Ministry of Finance released in February. It is projected that, due to improving investment climate in Lithuania, export market recovery and EU assistance annual growth in the 2nd half of the year may reach about 4 – 5 per cent of GDP. Therefore, 1.6 per cent GDP growth scenario for 2010 drafted in February, basically, remains unchanged. On the other side, the coordinated economic recovery policies of the EU Member States and European Central Bank make presumptions for more rapid investments, therefore, if in the 3rd quarter statistical data proves the start of revived investments in Lithuania, then the central scenario of economic indicators will be revised accordingly by making projections for more dynamic economy in the medium term.

In the 1st half of the current year, exporting sectors remained to be the national economic growth contributors, while the beginning of stabilisation is observed in domestic demand – oriented sectors. Simultaneous growth in export volumes and export prices accompanied by stabilisation of wages demonstrates competitive ability of Lithuanian economy. The average salary projection for 2010 has been increased by LTL 23 up to LTL 1,967.7, and for the year 2013 – increased by LTL 135 up to LTL 2,146.5.

Despite economic recovery, the unemployment rate will remain quite high during the entire medium term. It is projected that the unemployment rate in 2010 will grow by 17.9 per cent, while from the year 2011 it will start gradually decreasing and in 2011–2013 will represent 16.2 per cent, 14.4 per cent and 12.3 per cent, accordingly. The Unemployment rate projection has been corrected taking into consideration the fact that in order to be insured by the compulsory health insurance, the jobless, who had not evaluated their current status actively, have registered themselves in the labour market.

Due to the euro depressiation against the dollar projected by the European Commission, higher growth of global oil, food prices as well as prices of other products, and changed salary trends, the price change perspective estimated by harmonised consumer price index (hereinafter – HICP) is changed: substantially higher HICP inflation is projected in 2010: the average annual inflation will constitute 1.1 per cent in 2010, while annual inflation in December could represent about 2.5 per cent. In 2011 the average annual inflation would make up 1.8 per cent, while in 2012 – 2.5 per cent, and in 2013 – 2.5 per cent.

The Ministry of Finance leaves also GDP growth projection for 2011 unchanged – the economy will grow 2.8 per cent. It is projected that in 2012, due to a negative effect of decreased investments during the crisis in 2009 on the potential economic growth, GDP growth will decelerate down to 1.2 per cent, and afterwards increase of the investors’ confidence in regional perspectives and larger investments into exporting sectors, GDP could grow 2.4 per cent in 2013.

Projections of Lithuanian Economic Indicators (September 2010)