Analytics, Covid-19, Economics, EU – Baltic States, GDP

The latest forecast differs greatly from the 7.9% decline projected by the EU's executive body in May. That would have been the sharpest fall in the Baltic region. 

In the its Autumn 2020 European Economic Forecast, the Commission forecasts GDP contractions of 5.6% in Latvia and of 4.6% in Estonia. 

Lithuania's GDP is expected to rebound by 3.7% next year and grow by 3% in 2022. 

However, Lithuania's projected recovery in 2021 is slower than Latvia's and Estonia's, at 4.1% and 4.2%, respectively, and below the average rates for the EU and the euro area, at 4.1% and 4.2%, respectively.  

The Commission noted that Lithuania's economy withstood the initial blow of the COVID-19 pandemic relatively well.

"Recent data point to a strong recovery in the second half of 2020, although the unemployment rate is forecast to remain elevated in the near term," it said. 

"A significant stimulus package has helped to preserve jobs but has inflated the deficit and public debt."

However, the Commission expects Lithuania's growth "to slow in the coming years due to the fragile situation of international trade and moderation in domestic demand".

The Autumn 2020 Economic Forecast projects that the euro area economy will contract by 7.8% in 2020 before growing by 4.2% in 2021. The EU economy is expected to shrink by 7.4% this year before recovering by 4.1% next year.