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Projections of Lithuania’s Key Economic Indicators for 2009–2012

Date

2009 09 14

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Vilnius, September 11. The Ministry of Finance does not revise the GDP contraction scenario, which envisaged the decrease of GDP by 18.2 per cent this year. The scenario was already applied while revising year 2009 budget in July.

The Ministry of Finance does not revise the scenario of economic indicators made in June considering the fact that preliminary GDP growth data significantly changes after each planned update, and due to the Department of Statistics of the Republic of Lithuania plans to announce the final update of GDP for 2007 in October 2009. The draft budgets of general government will be prepared following the scenario that GDP will be decreasing by 18.2 per cent in 2009 and by 4.3 per cent in 2010. Economic growth is foreseen for 2011, when the planned real GDP growth rate will constitute 4.5 per cent.

Restructuring of economy will further increase labour force supply. The job-seekers will make up about 20 per cent of the labour force in 2010, and will presume the further decrease of salaries. It is foreseen that the average annual salary in 2009 will be less by 6.8 per cent than in 2008, and in 2010, in comparison to 2009, it will decrease by more 8.7 per cent. Due to scares credit resources, smaller salaries, purchasing power will continue to shrink, and this will pressure down prices. Inflation will be replaced by deflation. The average consumer prices in 2009 will be about 3.6 per cent higher than in 2008. In 2010 they will be decreasing by 3 per cent, in 2011 – by 2.8 per cent and in 2012 – by 0.5 per cent.

The increased manufacturing of 9.4 per cent in July (as compared to June), excluding production of refined oil products and after adjusting for the number of working days and elimination of seasonality, provides for optimism. If it emerged that the data of July was not the beginning of new optimistic trends, then the projections for growth in 2010 would be adjusted in October.

 

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