Lithuanian GDP growth pushes to 3.6% y/y in Q4 and 2018 alike

Lithuanian GDP growth pushes to 3.6% y/y in Q4 and 2018 alike
By bne IntelliNews February 3, 2019

Lithuanian GDP growth accelerated to an adjusted 3.6% y/y in the fourth quarter, according to a first estimate released by Statistics Lithuania on January 30.

The good performance in the fourth quarter also drove the full-year figure to an adjusted 3.6% in 2018 (3.5% in unadjusted terms), with growth benefitting from “solid domestic consumption, active investments and surprisingly strong external sector in a wake of slowing global growth,” according to Swedbank.

The y/y fourth quarter result marks a pick-up of 0.3pp against the revised growth of 3.3% y/y (adjusted terms) in the third quarter. The unadjusted expansion came in at 3.9% y/y in October-December, compared to a revised growth of 2.6% y/y in the third quarter, data showed.

Growth is expected to ease to 2.7% y/y in 2019, supported by strong consumption and investment, although the latter will have its limitations, according to Swedbank.

“Capacity constraints and labour shortages should incentivize companies to invest more, but it puts a limit to the speed of expansion without overheating,” Swedbank predicted. On the upside, the flow of EU investment funds should accelerate and support investment.

The tax reform kicking in this year is also expected to give the economy a sizeable fiscal boost in 2019. The overall mood in the economy is that of high confidence, largely unaffected by global uncertainties, at least currently. 

In quarterly terms, GDP grew an adjusted 1.6%, compared to a revised expansion of 0.1% q/q in the third quarter. In unadjusted terms, GDP fell 2.2% q/q versus a revised growth of 8.3% q/q previously