VILNIUS - Lithuania’s economic growth accelerated to an annual 6.9 percent rate in the first quarter, the second-fastest in the European Union, driven by investments and domestic demand, reports Bloomberg. The expansion compares with a 4.8 percent increase in the fourth quarter, the Vilnius-based statistics office said in an e-mailed statement last week.
The first-quarter figure matches the preliminary estimate released on April 28. The economy expanded a seasonally adjusted 3.5 percent from the previous quarter.
Lithuania, which together with Estonia and Latvia suffered the world’s deepest recession in 2009, is benefiting from rising demand for its exports that account for about two-thirds of output. Foreign sales and recovering domestic demand have pushed economic growth to the fastest rate in the EU after Estonia.
“The recovery continued to broaden,” said Annika Lindblad, an economist with Nordea Markets. “Investments got a boost and an encouraging sign for the rest of the year was the strong 5.5 percent growth in private consumption, increasing confidence in a recovery in domestic demand as well.”
The bond yield on Lithuania’s 2015 dollar-denominated bond fell 0.03 percentage points to 3.42 percent, the lowest on record.
The International Monetary Fund on May 19 raised its economic-growth forecast for Lithuania to 6 percent this year from 4.6 percent. The Finance Ministry estimates the economy may grow 5.8 percent this year, betting on an export-driven expansion as growth in the rest of Europe propels shipments of Lithuanian products to record highs.
Household consumption grew an annual 5.5 percent in the first quarter and capital formation jumped 41 percent from a year earlier on investments in real estate, equipment and machinery, the statistics office said.
Exports grew an annual 21.8 percent in the first quarter, driven by sales of refined fuels, cars and fertilizer. The Orlen Lietuva refinery, the nation’s biggest exporter, said crude processing grew 27 percent in the period from last year.
Retail trade expanded an annual 20 percent in the first three months of the year as consumers spent more on cars and clothing. Car sales rose an annual 83 percent in the period driven by demand from neighboring Belarus as the country prepares to unify its tariffs for vehicle imports from July 1 with other countries in a customs union that also includes Russia and Kazakhstan.