Farming holds back better numbers

VILNIUS - The Lithuanian economy expanded at a faster rate in the third quarter than previously estimated as construction output grew for the first time in almost two years, revised data showed, reports Bloomberg. Gross domestic product grew 1.1 percent, compared with a preliminary estimate of 0.6 percent released on Oct. 28, the Vilnius-based statistics office said in an e-mailed statement on Nov. 26. The growth rate was unchanged from the previous quarter.

The Baltic nation sustained the pace of recovery in the third quarter as the economy emerges from the European Union’s second-deepest recession of 14.7 percent last year. The government is counting on exports to support expansion as domestic spending remains fragile. “The majority of industries moved into positive territory in the third quarter and if it hadn’t been for the poor agriculture performance, the economy would have expanded at twice the rate,” said Vilija Tauraite, an economist with SEB Bank in Vilnius.

The value created in agriculture, which accounts for a bigger share of GDP in the third quarter than in other periods, fell 10.5 percent over the year.
The yield on Lithuania’s 10-year bond rose 0.04 percentage point to 5.65 percent on Nov. 26.
In the quarter, output grew a seasonally adjusted 0.6 percent, compared with a preliminary estimate of 0.1 percent, the statistics office reported. The value created by the construction industry grew 6.4 percent in the third quarter from the same period last year, the statistics office said.

“Revised construction and transport figures led to GDP growth being faster than previously estimated,” the office said. “The construction sector grew for the first time after contracting for seven consecutive quarters.”
Construction, the worst-hit industry during the economic crisis after contracting about 50 percent last year, is recovering from “very low levels,” Tauraite said. “We’ve been waiting for a positive figure for a while now. The increase is nothing close to a boom, but it’s no longer a dead silence either.”

Exports, which make up about 65 percent of total economic output, grew 9.9 percent in the third quarter from the previous three-month period. Industrial output, representing about 20 percent of the economy, increased an annual 7.8 percent in the third quarter, compared with a 4.5 percent gain in the second.
The decline in household spending slowed to a 0.9 percent rate in the third quarter compared with an 8.2 percent drop in the previous three months. Public sector expenditures shrank 2.4 percent, compared with a 1.7 percent decline in the second quarter. Gross fixed-capital formation grew an annual 15 percent, marking the first increase in 11 quarters. “Companies are starting to have the courage to invest in equipment and machinery to increase efficiency,” Tauraite said. “That’s good news.”

The government forecasts the economy will expand 1.6 percent this year. Neighboring Latvia grew 2.7 percent in the third quarter, while Estonia expanded at a 4.7 percent rate.