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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 17:00

Danske maintains Lithuania's GDP growth forecast for 2015

BC, Vilnius, 27.11.2014.Print version
Even though Russia's sanctions have continued for longer than anticipated and Lithuanian transport sector will incur losses, nonetheless it is yet too early to talk about the impact on Lithuania's gross domestic product (GDP) growth, says Head of Financial Markets at Danske Bank Giedre Geciauskiene, cites LETA/ELTA.

Danske Bank maintains Lithuania's GDP growth forecast without alternations, 2.7% GDP growth is projected for 2015 and 3.1% for 2016.

 

One of the main assessment criteria regarding Lithuania was an assumption that sanctions would be lifted in one to three months. Intense diplomatic work was expected to give a result. However, new challenges have arisen instead. Tighter control of Lithuanian road carriers at the border may be motivated by any reasons. Nonetheless, the result is the loss of revenue for carriers. Meanwhile, the exporters face a disruption of the supply chain and possible breach of contracts. Lastly, any restrictions on trade result in losses for companies, sectors and economy.

 

As a matter of fact Russia imposed similar tight checks of Lithuanian vehicles at the same time last year. Many must have forgotten the arguments behind the last year's move. Explaining Russia's actions is becoming vain, people should instead focus on finding prompt solutions.

 

In 2013 thorough inspections were lifted after four weeks of intensive diplomatic efforts and direct dialogue with Russia, as well as support from the European Commission. That period of restrictions did not have a visible impact on Lithuania's economy. For example, road transport sector's revenue from foreign trade in the fourth quarter of 2013 even increased year-on-year and quarter-on-quarter. Lithuania's GDP growth was 3% in the third quarter of 2013, 3.3% in the fourth quarter of 2013 and remained the same in the first quarter of 2014.

 

According to Geciauskiene, revenue of road carriers from foreign trade is substantial and constitutes 4.3% of Lithuania's GDP. That is why Danske Bank carefully evaluates the impact of trade restrictions on Lithuania's economic growth and is concerned over possible negative impact.

 

Although it is unknown for how long the situation will continue but even if it does it will affect only a portion of road carriers as Lithuania's export to Russia accounts for around 20% of the total export.

 

Next, the impact should be only on road freight transport sector because in the worst case goods can be carried using vehicles of other countries.

 

Lithuanian transport sector will incur losses but it is too early to talk about definite influence on GDP growth. Thus Danske Bank maintains Lithuania's GDP growth forecast at 2.7% in 2015 and 3.1% in 2016.






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