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European Commission: Further Lithuania’s Economic Growth Will Be Ensured by Recovering Exports and Consumption

Date

2016 05 03

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Today the European Commission (EC) announced the spring 2016 macroeconomic assessments of the European Union (EU) Member States, where a better general government deficit, higher investment growth, and lower unemployment rate are projected for Lithuania.

“The European Commission’s Spring Forecast shows healthy Lithuania’s economic growth, and in the short term the main driver for this growth will be not only solid household consumption, but also recovering exports,” Minister of Finance Rimantas Šadžius states.

As compared to the EC Forecast announced in February, in 2016 the Commission expects more rapid investment growth in Lithuania (2.5% as compared to 1%), however, slightly slower household consumption growth (4.3%; earlier forecast was 4.9%).

In the Commission’s opinion, Lithuania’s household consumption will be strengthened by accelerating wage growth (4.6%), however, it will be restrained by recovering inflation (0.6%; earlier forecast was deflation of 0.1%).

Export growth (3.1%) will be driven by the demand for the main Lithuania’s export partners in the European Union. Due to rapid decline in the labour force in 2016 the unemployment rate in the country is forecast to be slightly lower (7.8% as compared to 8%).

In comparison with the forecasts announced in February, for 2016 the Commission projects Lithuania’s general government deficit to have decreased by 0.1 percentage point and the structural general government deficit – by 0.3 percentage point, 1.1% of GDP and 1.2% of GDP, accordingly.

Under a no-policy-change assumption, the Commission did not change the forecast for the general government balance for 2017: the general government deficit is forecast to be 0.4% of GDP. However, the forecast for the structural general government deficit was improved by 0.2 percentage point and makes up 0.8% of GDP.

In the Economic Development Scenario published in March the Ministry of Finance envisages that in 2016 GDP growth will make up 2.5%, household consumption expenditure – 4.3%, exports of goods and services – 3.6%, inflation will account for 0.7%, wage growth will represent 5.8%, while the unemployment rate will amount to 8%.

European Commission Press Release

Spring Economic Forecast

Remigijus Bielinskas
Adviser to the Minister of Finance
Phone: +370 5 239 0008; +370 616 94846
Public Relations Division
vrs@finmin.lt