Economics, GDP, Good for Business, Lithuania

"The temperature diagram of Lithuania's economy, drawn up by the fiscal institution, shows that Lithuania economy has been heating up since 2016 as the labor market is tightening and the overcapacity level is growing. Due to the existing economic cycle, it is important to implement a responsible fiscal policy and increase the economic downturn reserve," Ingrida Vilkancaite, chief specialist at the National Audit Office of Lithuania was quoted as saying in a statement.

The Lithuanian government has been allocating excess budget revenue for the formation of a financial reserve. Finance Minister Vilius Sapoka said earlier the reserve was estimated to reach around 300 mln euros by the end of this year.

According to national auditors, growth in Lithuania was balanced in the first half of this year and was positively affected by internal demand and net exports. Meanwhile, the so-far neutral external risk balance has turned negative and includes tension in the international trade area, a growing risk of a hard Brexit and potential fluctuations on the global financial markets as well as the risk of the Turkish financial crisis spilling over to EU member states and Italy's new government's plan to implement a non-sustainable fiscal policy amid already one of the highest debt levels in the EU.

The Finance Ministry of Lithuania updated its GDP forecasts last week and expects growth of 3.4% this year and 2.8% in 2019.