Lithuanian economy review - 2017 Q2

GDP growth more than twice higher than in EU and remains the strongest in three years. In the second quarter of 2017, as compared to the same period of the previous year, Lithuania`s GDP grew by 4.0% and accounted to €10.2 billion at current prices. The economic growth driven by the household consumption and investments. Exports was greater than imports, despite strong domestic consumption and investment activities climbed imports of goods.

The main factors behind the growth in household consumption related to the positive labour market developments, wages growth and favourable credit conditions. The growth in gross fixed capital formation largely related to increase in funding from the new EU financial framework 2014-2020 and public sector spending.

The highest growth of gross value added was in wholesale and retail trade, repair of motor vehicles and motorcycles, manufacturing activities. The decline was only in the agriculture, forestry and fishing sector.

The gross fixed capital formation shows positive performance. In the first half of 2017, as compared to the same period of the previous year, gross fixed capital formation amounted to €3.5 billion or by 9.1% higher as compared to the same period of the previous year. The growth in demand and raise in wages were among the main drivers of increase in productive investments in business sectors. In the period under review, the investments in ITC products grew by 27.3%, meanwhile it picked-up by 25.5% in to intellectual property products.

The growth of real average monthly earnings keeps growing at a high rate. In the second quarter of 2017, as compared to the same period of the previous year, real average monthly wage increased by 6.0%. Gross monthly earning increased by €66.8 and amounted to €838.7. The unemployment rate fell by 1.0 percentage points and reached 7.0%. The number of employees in Lithuania increased by 0.9% or by 11.5 thousand. In private sector it grew by 18.3 thousand, meanwhile in public sector it fell by 6.8 thousands. The highest increase in number of employees was in transportation and storage, administrative and support service activities and manufacturing sectors.

Exports of goods keeps booming. In the second quarter of 2017, as compared to the same period of the previous year, the value of exports of goods increased by 17.8%. It was the highest among the Baltic States. The growth in exports of goods was due to a rise in all kinds of export. The growth of exports of refined petroleum products amounted to 26.4%, an increase in re-exports of goods - 22.3%. The exports of Lithuanian origin goods (energy products excluded) increased by 11.9% (mostly machinery and equipment, milk products, plastics and tobacco). The exports of Lithuanian origin goods (energy products excluded) forecasted to grow by 12% in 2017 and by 6.5% in 2018.

Industrial production see high growth. In the period under review, as compared to the same period of the previous year, industrial production increased by 6.8% and amounted to €5.0 billion. It mostly driven by the manufacture of machinery and equipment, electronic and optical, metal, wooden, tobacco and dairy products. The growth of material investments in manufacturing sector increased by 25.9% or €45 million.

The growth of construction sector was one of the fastest In the EU. In the second quarter of 2017, as compared to the same period of the previous year, the volume of construction works carried out within the country increased by 6.4% and amounted to €0.6 billion. The main driver of this growth was an investment to non-residential buildings. The number of employees in construction sector grew by 2.0%, meanwhile revenues up by 17.1%.

The growth in retail trade decelerated, but remained among the fastest growing in Europe. In the period under review, annual change in turnover of retail trade was 9.4% and reached €2.6 billion at current prices (real annual change – 4.7%). This growth was driven mainly by automobile fuel and non-food retail.

 

Last updated: 06-10-2017