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Finance Ministry: upward revision of economic indicators is based on a faster-than-expected recovery

Date

2010 02 02

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Newly revised figures for economic as well as export growth in 2010 released by the Ministry of Finance of the Republic of Lithuania show that the country is poised for a rebound in 2010-2011.

Recovery in Lithuania's investment climate will translate into GDP growth of 1.6 percent this year and 3.2 percent in 2011. Last autumn, ministry analysts expected a contraction of 4.3 percent in 2010, with a return to growth coming in 2011.

Export volumes have begun to pick up significantly in the second half of 2009 thanks to a broad-based recovery in the EU. The ministry expects Lithuanian export growth to enter double-digit territory and could make up 13-18 percent in 2010.

"Based on a detailed analysis of export data, we see clear signs of a vigorous and rapid recovery of exports and if this trend continues we will see double-digit growth in 2010," said Lithuania's Finance Minister Ingrida Šimonytė.

The successful absorption of EU structural support funds is a crucial underlying factor in the faster-than-anticipated recovery, the Minister said, adding that 2010 would be a banner year for Lithuania in terms of its levels of EU fund absorption.

The Minister also underscored that signs of improvement in the economy mean Lithuania is closer to achieving Maastricht convergence targets for deficits.

"Thanks to the improved GDP forecasts, we have revised the general government deficit target down to 8.1 percent of GDP in 2010, which is much lower than the previous 9.5 percent figure," Šimonytė said.

She also said the 3-percent-of-GDP deficit cap set out in the Maastricht criteria is achievable in 2012.

"Lithuania will continue its drive to consolidate public sector finances, thus maintaining a high level of investor confidence," the Minister said.

Indicators for consumer price stability are expected to fall well within euro adoption criteria in the coming years.

The ministry anticipates annual deflation of 1 percent in 2010, followed by consumer price inflation of 1 percent in 2011 and 1.5 percent in 2012.

For a comprehensive table of the Ministry's latest economic indicator predictions, please visit our Internet site.