Saving again for a rainy day

  • 2011-09-21
  • From wire reports

VILNIUS - Analysts at SEB bank have not changed their growth forecast for 2011, saying Lithuania’s GDP, which remains at 6.5 percent, will see next year’s forecast revised down from 5.5 percent to 4 percent, reports ELTA. In 2013, the country’s GDP will be 4.5 percent, down from 5 percent, the SEB bank said. Lithuania’s consumer prices may accelerate at a faster rate than previously estimated this year as rising gas prices increase heating costs, the bank said on Sept. 20, when presenting its Lithuanian Macroeconomic Review.

SEB bank raised its 2011 inflation forecast to 4 percent from a previous estimate of 3.5 percent. Price growth may slow to 3.5 percent next year from a previously foreseen 4 percent, it said. Lithuania’s exports started losing momentum as they hit sluggish demand from key foreign trade partners, adviser to SEB bank’s president, Gitanas Nauseda, said. In turn, the fall in exports affected investment because businesses started viewing the prospects of expansion with caution.

As we should not expect quick growth of government spending this year or in the upcoming year, the only GDP element giving hope is in household consumption. Nauseda says that in the short-term perspective, one should worry most about heating bills, which will surely become bigger and will force people to limit themselves to unavoidable expenses and will decrease the demand of non-staple products.

“I would not wish that, but some indications show that the rainy days fear will start haunting us again,” he said.