Analytics, Economics, EU – Baltic States, Inflation, Lithuania, Markets and Companies

According to Swedbank's latest economic forecast, Estonia's gross domestic product (GDP) will rise by 2% this year and by 2.5% in 2017, whereas the Latvian GDP growth should be 3% over the next two years.

Unlike in many countries, Lithuania's economic tendencies in early 2016 were better than expected, Swedbank analysts say. Regardless of the major fluctuations on financial markets, consumer and business expectations in Lithuania remained stable or even improved, while the growth of retail trade, manufacturing and exports accelerated.

The bank's analysts did not revise the Lithuanian GDP growth forecasts but reduced the forecasts for Estonia and Latvia. In January, the bank's analysts expected the Estonian economy to grow by respective 2.3% and 2.6% in the coming two years, while the forecasts for Latvia were 3.3% and 3%.

Private consumption in Lithuania is expected to grow by 4.9% this year and by 3.8% in 2017, with respective growth forecasts for the government sector at 3% and 1.5%. Investments should swell by 9% this year and by further 6% next year.

Swedbank analysts say that exports of Lithuanian goods and services, which went up by merely 1.2% last year, should increase by 3% in 2016 and 5% in 2017, while imports should grow by 7% and 6.5%, respectively.

The average annual inflation in Lithuania this year will be 1.8%, say analysts of one of the country's largest commercial banks, Swedbank. In January, they forecast that 2016 inflation would be at 2%.

According to the latest Swedbank economic review, the inflation forecast has been reduced to the sharp decrease in many raw materials in early 2016.

Nevertheless, the analysts predict that oil prices will not hit the lows reported at the beginning of 2016 and will continue climbing, bringing the average annual inflation next year to 3.2%, up by 0.2%age points from earlier forecasts.

"However, even the growing inflation should not undermine the purchasing power of the population, as the average (monthly) salary is forecast to grow by 6.5% and 6%, respectively, this year and in 2017. The increase of average wages is due to the rapid growth of minimum monthly salary, as well as the lack of employees and the growing negotiating power they have," Swedbank said in a press release.

According to Swedbank, the unemployment rate in Lithuania should drop to 8.1% this year and to 7.4% in 2017.