Analytics, Economics, EU – Baltic States, Financial Services, GDP, Lithuania

The bank's new growth projection for 2018 is up from a 2.8% estimate issued in late 2017. The forecast for 2019 is unchanged.

"Inflation, which limited consumers' appetite at the end of last year, raised concerns that Lithuania might enter a stagflationary phase of economic development and find itself caught in a spiral of rising prices and wages that would have in the long run affected the country's international competitiveness," Indre Genyte-Pikciene, the bank's chief analyst, said at a news conference on Tuesday

"However, the latest data show that we managed to pass that test," she added. 

Genyte-Pikciene expects domestic consumption and EU support to be the key drivers of Lithuania's economic growth this year and next year.

In their spring forecast, Luminor's analysts revised upward their inflation and wage growth estimates for 2019. 

The bank predicts that Lithuania's average annual inflation will reach 2.5% this year, unchanged from the previous estimate, and will accelerate slightly to 2.8% next year, up from 2.6%. 

Gross average wages are expected to grow by 6% in 2018, unchanged from the forecast released in late 2017, and by 8% in 2019, up from 5%.