Lithuanian economy review - 2017 Q1

GDP growth - the strongest in three years. In the first quarter of 2017, as compared to the same period of the previous year, Lithuania`s GDP growth accelerated to 4.1% and reached €9.2 billion at current prices. The economic growth driven by the household consumption and investments, meanwhile strong domestic market and investment activities climbed imports of goods. The main factors behind the growth in household consumption related to the positive labour market developments, wage growth and favourable credit conditions. The main restricting factor was decline in gross fixed capita formation in public sector, largely related to the slower than expected absorption of 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, manufacturing and construction activities. The decline was only in the agriculture, forestry and fishing.

The investments in tangible fixed assets picked up by the private sector. In the period under review, the investments in tangible assets amounted to €1.05 billion or by 6.2% higher as compared to the same period of the previous year. The main factor behind the growth was an increase of the investments in private sector by 16.3% or €126 million (mostly productive investments like machinery and equipment and constructions). The investments of government sector declined by 29.7% to €0.15 billion due to the low EU funds flow. The share of public investment was the lowest since 2000 (14.7%).

The growth of real average monthly earnings accelerated. In the first quarter of 2017, as compared to the same period of the previous year, real average monthly wages increased by 7.4%. Gross monthly earnings increased by €69.6 and amounted to €817.6. The unemployment rate fell by 0.3 percentage points and reached 8.0%. The employment growth mostly occurred in the private sector. The number of employees in this sector grew by 18.8 thousand, meanwhile in public sector it fell by 6.7 thousands. The highest increase in number of employees was in transportation and storage, administrative and support service activities and manufacturing sectors.

Exports of goods boomed. In the first quarter 2017, as compared to the same period of the previous year, the value of exports of goods increased by 17.5% to €6.1 billion. It was the highest rate among the Baltic States. The growth in exports of goods was due to a rise in exports of refined petroleum products (+55.6%) as well as an increase in re-exports (+17.9%). The exports of Lithuanian origin goods (energy products excluded) increased by 9.7% (mostly furniture, tobacco, milk products and plastics). The biggest increase in export of Lithuanian origin goods was to Poland, Sweden, Latvia, Netherland and Estonia.

The growth of industrial production accelerated. In the period under review, as compared to the same period of the previous year, industrial production increased by 5.9% and amounted to €4.9 billion. Without refined oil products, industrial production increased by 5.8 % or €233 million to €4.0 billion. It mostly driven by manufacture of the fabricated metal, machinery and equipment, wooden products, furniture, rubber and plastic products.

The growth of construction sector was one of the fastest In the EU, after fall in 2016. In the first quarter 2017, as compared to the same period of the previous year, the volume of construction works carried out within the country increased by 7.1% and amounted to €0.4 billion. The main driver of this growth was an investment of private sector to non-residential buildings. Exports of construction service fell by 3.5% (average annual growth over the past ten years was 30%).

The retail trade – EU third biggest growth. In the period under review, real annual change in turnover of retail trade was 7.7% and reached €2.3 billion at current prices. This growth was one of the highest in the EU after Slovenia and Luxembourg.

 

Last updated: 21-06-2017