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International Internet Magazine. Baltic States news & analytics Wednesday, 20.02.2019, 03:33

Depleted exports will halt Lithuania's economic growth in 2018

BC, Vilnius, 24.01.2018.Print version
Exports growth that will be more than two times slower in 2018 than it was last year will be one of the main reasons behind slower economic development, Swedbank Lithuania's chief economist Nerijus Maciulis has said, cites LETA/BNS.

"As one of the most open economies worldwide, which his dependent international trade and exports, Lithuania last year benefited greatly, and its economic growth accelerated to nearly 4%. Unfortunately, we cannot expect the same speed of economic growth this year. Some signs show that it will shortly deplete and this is the reason why we slightly lowered the GDP growth forecasts," Maciulis told a news conference on Wednesday.


After projecting that the gross domestic product (GDP) would grow by 3.5% for 2018 six months ago, analysts this time lowered the forecast to 3.2%. The 2017 GDP growth forecast remains unchanged, with Lithuania's economy expected to grow 3.8%. The 2019 forecast remains at 2.5%.


According to preliminary data, Lithuania's exports went up by 12% last year, however, analysts of the bank believe the growth should slow down to 5%.


"We think that this year the exports will decelerate, as the competitiveness of costs is declining in Lithuania, while labor costs are growing faster than productivity. This causes an increase of the labor costs, and competing at a low price is more difficult for Lithuania. Furthermore, the euro became considerably more expensive against the US dollar and other currencies, therefore, more expensive currency makes it more difficult to export to the US, the Nordic countries and other states," said Maciulis.


The bank's analysts expect this year's inflation to widen by 3.3%, with the increase of prices slowing down to 2.5% in 2019 – both forecasts remain unchanged. Swedbank believes the unemployment levels this year and in 2019 to stand at 6.9%, with the average gross salary climbing by 7% and 6%, respectively.


In 2018-2019, Lithuania's exports should widen by 5% and 3%, respectively, while imports should grow by 6.5% and 4%.

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