Lithuanian economy review - 2016

The GDP growth in Lithuania accelerated. In 2016, as compared to the previous year, Lithuania`s GDP increased by 2.2% (seasonally adjusted) and reached €38.6 billion at current prices. The economic growth driven by the household consumption and exports of goods and services. The growth in household consumption related to the positive changes in wages, increasing number of employees and credit growth. The main restricting factor was decline in investments of government sector, largely related to the slower than expected absorption of the funds from the new EU financial framework 2014-2020.

The highest growth of gross value added was in wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, accommodation and food service activities, manufacturing. The biggest decline was in the construction sector (especially civil engineering structures).

The investments in tangible fixed assets picked up in the private sector. In the period under review, the investments in tangible assets amounted to €5.68 billion or by 0.3% lower as compared to the previous year. The main drop of the investments was in the construction of buildings and civil engineering structures, while the investments flow into machinery, equipment and vehicles was positive. The decrease of the investments of government sector reached €0.49 billion due to the lower EU funds flow. At the same time, the growth of the private sector investments amounted to €0.48 billion (mostly productive investments like machinery and equipment).

The unemployment rate continued to decline, wages keeps growing, but imbalances in the labour market persist. In 2016, the unemployment rate fell by 1.2 percentage points and reached 7.9%. At the same time, youth unemployment rate and long-term unemployment rate has dropped to the lowest level since 2008 (14.5% and 3.0% respectively). The employment growth mostly occurred in the private sector, in particular in wholesale and retail sectors, manufacturing and administrative and support service activities sectors. Average gross monthly wages increased by 7.9% and reached € 770.8. Despite recent positive changes, imbalances remains on the regional level: low employment outside biggest cities, meanwhile high demand in high-skilled professionals in the central cities remain.

Exports of goods declined. In 2016, as compared to the previous year, the value of exports of goods decreased by 1.3% to €22.6 billion. The fall in exports of goods was due to a decline in prices of refined petroleum products as well as a decrease in re-exports to the countries of CIS. The exports of Lithuanian origin goods (energy products excluded) increased by 2.7% (mostly furniture, lasers and tobacco). The biggest increase in export of Lithuanian origin goods was to Sweden, Japan, US, Poland, UK, Norway, Turkey and India.

The growth of industrial production remain positive, companies posted the growth in profits. In the period under review, as compared to the previous year, industrial production increased by 2.8% and amounted to €18.4 billion. Without refined oil products, industrial production increased by 4.9 % or €344 million to €15.2 billion. Figures shows that production growth mostly driven by the fabricated metal, chemical and food products industries.

The construction sector declined due to the fall in the EU funding. In 2016, as compared the previous year, the volume of construction works carried out within the country fell by 9.6% and amounted to €2.28 billion. The main negative factor was a slump in the investments of public sector, suffered from the EU structural fund planning period changeover. At the same time, exports of construction service increased by 16% (average annual growth over the past ten years - 30%).

The retail trade – one of the fastest growing in the EU. In 2016, real annual change in turnover of retail trade was 6.8% and reached €9.51 billion at current prices. This growth was one of the highest in the EU after Romania and Luxembourg.

The transport sector continued to grow. In 2016, the growth rate of total carried cargoes in transport sector was 3.8%. The growth in the road transport accounted for 8.5%. At the same time, handled cargo by rail transport fell by 0.8%, in seaports declined by 4.4%, meanwhile amount of cargoes in airports fell by 31.3%.

 

Last updated: 28-04-2017