VILNIUS - The Lithuanian economy expanded at a revised 1.3 percent pace from a year earlier in the second quarter as export growth and manufacturing picked up, reports Bloomberg. The figure compares with a preliminary estimate of 1.1 percent announced July 28 and a 2.8 percent contraction in the first quarter, the Vilnius-based statistics office said on Aug. 27 in an e-mailed statement.
Gross domestic product increased a seasonally adjusted 3.2 percent from the previous quarter, revised up from 2.9 percent. The Baltic nation’s economy returned to growth in the period after contracting for six consecutive quarters and suffering a 14.8 percent slump last year. Exports and industrial output expanded with the improving global economy, helping to offset weak domestic demand.
“The recovery is largely dependent on export demand, especially this year, with private consumption gaining importance only in 2011,” said Annika Lindblad, a Helsinki- based economist at Nordea Markets. “Although we see growth accelerating in the next couple of quarters, GDP will remain below the highs seen in 2008 for several years.”
Lithuanian Prime Minister Andrius Kubilius pushed through spending cuts to cap the budget deficit, undermining domestic demand. Consumer spending will remain weak in 2010, with consumption shrinking 2.7 percent, the central bank estimates. The International Monetary Fund estimates the economy will grow 2.1 percent for all of 2010, the most optimistic estimate amongst major forecasters.
The government expects a 1.6 percent expansion for the year. The yield on Lithuania’s 10-year bond rose 0.04 percentage point to 5.6 percent on Aug. 27. Lithuania’s industrial output, representing about 20 percent of the economy, grew an annual 4.5 percent in the second quarter, compared with a 4 percent drop in the previous three months. Exports grew an annual 37 percent in the April-June period, led by fuel sales from refiner Orlen Lietuva.
The Baltic economies of Estonia, Latvia and Lithuania are rebounding after suffering the worst recession in the European Union last year as the credit markets froze. The pace of their recoveries is beating economist estimates, prompting analysts at Danske Bank and Capital Economics to upgrade their outlooks for the region. Estonia’s economy recorded annual growth of 3.5 percent in the second quarter, the first increase in 2-1/2 years. Latvia’s GDP grew a quarterly 0.1 percent, while the annual contraction slowed to 3 percent from 6 percent.