VILNIUS -- The Bank of Lithuania has decided that inflationlevels and GDP growth will both be higher than it previously thought and hasrevised upwards its forecasts as a result.
A Jan. 25th bulletin issued by the bank notes thatthe expected inflation figure has been hiked significantly from 5.7% to 7.9% onthe back of news that consumer gas prices are set to rise by more than 60%during the course of 2008 and that food prices are also set to continue arecent series of sharp price hikes.
GDP growth is also set to climb, the Bank believes,from 7.4% to 8.1%. While such strong growth looks impressive and may help tomitigate the negative effects of high inflation, it also points to theoverheated nature of the economy.
However, the Bank sees the situation cooling off in2009 with projected growth at a more sustainable level of 5.7% and inflationdropping off to 4.9%.