Photo: Charles Dawley
VILNIUS- Lithuanian retailers are continuously observing aweakening consumption in neighboring Latvia and Estonia in recent months, it isafraid that Lithuanian consumers will soon start tightening their belts aswell, the Lietuvos Rytas dailyreported on Monday.
Following in the footsteps of Estoniaand Latvia, the central Bankof Lithuaniaand several commercial banks are expected to release their revised 2008 GDPgrowth forecasts, in early May.
The central bank predicted at the start of this year that the economy wouldexpand by just over 8 percent in 2008, which is close to last year's growthrate. The Finance Ministry's growth forecast was more modest, at 5.3 percent.
Vadim Titarenko, advisor to the president of DnB NordBankas, said that it was difficult to predict at what rate Lithuania'seconomy would expand.
He noted that Lithuania'smarine and rail transport industry continued to operate successfully, duepartly to a worsening of Russia'srelations with Estonia,and that the country's retail sales recorded an "astonishing" growthrate for the first months of the year.
The analyst said that in any case, Lithuaniashould be in a better situation than Estonia.
"If Lithuania'sgrowth rate reached 5 percent, that would not be a bad scenario. If the resultsare worse than that, this will lessen our chances of catching up with Western Europe at a faster rate," he said
Lithuanian-owned retail chains Maxima, Topo Centras and Apranga have alreadystarted to feel the pinch of weakening consumer spending in the neighboringBaltic countries.
"Apranga's overall sales revenue in these states continues to growth,since we have opened more stores. But if we look at figures for some olderstores, we see an annual decline of around 10 percent that their first-quarterrevenue," Lietuvos Rytas quotedRimantas Perveneckas, the company's CEO, as saying.
Topo Centras, which has a chain of 17 stores in Latvia, recorded a 10 percent dropin revenue as well. Ceslovas Steigvila, the chain's CEO, noted a decline inLatvian sales of household appliances, such as refrigerators and washingmachines.
"This could be attributed to the dormant real estate market. Also, thetightening of credit standards by banks has lead to a decline in lease-to-ownpurchases," he said.
"People give priority to buying food products and postpone purchases ofmore expensive items until better times," said Giedrius Juozapavicius, thehead of the Image and Communications Center of the Maxima Group, commenting on the recentchanges in Latvia and Estonia.