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Lithuania

According to the explicit statistical data, Lithuania's GDP does not absolve, after eliminating the effect of seasonality and the number of working days, the GDP growth of Lithuania was 3.1% in the first half of 2014, compared with the first half of 2013. The GDP for the first 6 months of the year, at current prices amounted to LTL 59.055 billion. GDP growth in the second quarter, compared with the second quarter of the previous year, was also 3.1%, while compared to the first quarter of this year - 0.8%. Previously reported that, GDP growth in the first half of this year was at 3%.[1]

According to analysts of the two largest banks in Lithuania – “SEB” and “Swedbank” - after the assessment of macroeconomic trends and the impact of bilateral sanctions between Russia and the West, they corrected forecasts of economic growth of Lithuania and other countries in the region. Analysts of “Swedbank” estimated the influence of the Russian embargo on the Lithuanian economy at 500 million euro, in the period of 2014-2015. That’s why the bank’s analysts reduced the GDP growth forecast by 3% this year and 3.5% in 2015. Just in April of this year, “Swedbank” was expecting 0.3 and 0.5 points of increase in economic growth percentage. The forecasts of SEB Bank for this year does not change, while forecast for the next year falls from 3.8% to 3.2%. Economic growth in the country will maintain low interest rates and expected weakening of euro, which means that the prices of products manufactured in the Eurozone (from 2015 already with Lithuania) will be more competitive on foreign markets. This will have a positive impact on the orientation of export to the new potential markets outside Europe. According to the opinion of analysts of SEB, Lithuania over the next three years will be the fastest growing country in the Baltics. In 2016, GDP growth of Lithuania is estimated at 4%. GDP growth of Latvia in the period of 2014 – 2016 is estimated at 2.5%, 2.7% and 3.4%. But in Estonia – respectively 0.5%, 1.8% and 3.0%.[2]

Lithuania is largest exporter among the Baltic countries. During the first seven months of 2014, Lithuania exported more than Latvia and Estonia together. This data is taken from the Latvian statistic department. According to the data of Lithuania in the period of January – July of this year, export reached 13.58 billion euros, Latvia 5.69 billion euros, Estonia 6.8 billion euros. In contrast, the volume of import respectively amounted at 14.79 billion euros, 7.10 billion and 7.81 billion euros. The share of exports and imports to/from the EU, in the general structure of foreign trade was the lowest, in the case of Lithuania. EU had 56% of exports and 64% of imports in Lithuania, in the case of Latvia, it was 73% and 79% and in Estonia – 72% and 83%.[3]

In September 2014, the statisticians noted deflation of 0.1%, in comparison with September of last year. The average inflation rate in Lithuania was 0.2% in September. During the year, the prices of consumption products decreased by 0.8%, while prices of services increased by 2.2%. The biggest impact on annual deflation had decreased the thermal energy prices by 17.7% in September, the fall in prices of fuel and oil was by 5.4%, gas – by 11.2% and electricity – by 5.4%, vegetables – 7.8%. However, during the year, the price of solid fuel increased by 12.2%, fruit – by 11%, tobacco – by 6.2%, milk and dairy products, cheese, eggs - 3.5%. Moreover, there was an increase in the price of the restaurant services, cafes and such type of other places, the price of coffee, tea and cacao increased by 9%, as well as the price of flat rentals increased by 11.7%.[4]

From the 1 January 2015, Lithuania will become the 19th member of the euro zone. The final decision was made by EU General Affairs Council. The Council also approved the official exchange rate of the litas to euro at a rate of 1 EUR = 3.4528 LTL. Moreover, in the acted legislation related to the introduction of the euro in Lithuania, “Lithuania will become not only a new member of the Eurozone, but very reliable member, as the economic and financial processes in Lithuania can be represented as a reliable and powerful example.” – said Sandro Gozi, the secretary for European Affairs of Italian government and the current chairman of council of Europe.

Prime Minister Algirdas Butkevićius promised that, Lithuania will continue to conduct responsible and sustainable policies. “Now we will be working on the public presentations about the advantages of euro and the possible defects. Our ministry is prepared for this.” – said Lithuanian Prime Minister.

According to the “Euro barometer” survey, 46% Lithuanian residents supported the introduction of euro, 48% was against. The European Commission stated that although the process of preparing the introduction of the euro in Lithuania was realized smoothly but certain areas require more effort. It‘s emphasized that Lithuania should quickly prepare the mechanisms that block the possibilities of traffickers/retailers’ abuse. Actually majority of population is concerned about that.[5]



[1] Lietuvos rytas, 30.08.2014

[2] Verslo žinios, 27.08.2014

[3] Lietuvos žinios, 09.10.2014

[4] Versli žinios, 09.10.2014

[5] Lietuvos rytas, 24.07.2014