Analytics, Budget, Economics, EU – Baltic States, GDP, Good for Business, Lithuania

The forecasts are unchanged from those released in early February.

"Domestic factors are set to continue supporting growth, but headwinds from the slowdown in Lithuania's major trading partners are projected to dampen export growth," the EU's executive body said in its Spring 2019 Economic Forecast report. 

"Private demand – consumption and investment – is expected to stay the main engine of growth though their growth rates are set to be slightly lower than in 2018," it said.

The Commission forecasts that private consumption in Lithuania will grow by 3.8% this year and by 3.3% next year.  

Gross fixed capital formation (investment) growth is projected at 5% and 4.4%, respectively. 

Lithuania's export growth is forecast to slow to 3.6% this year, from 4.9% in 2018, and stay at that level next year.  Imports should increase by 4.5% and 4.3%, respectively. 

The Commission forecasts that inflation in Lithuania "will ease further in line with falling oil prices".

"After peaking at 3.7% in 2017, HICP inflation fell to 2.5% in 2018 and is expected to slow further to 2.1% in 2019 and 2020. This is mainly a reflection of the projected fall in oil prices," it said. 

According to the report, "lower labor taxation and higher government expenditure are set to drain the general government surplus, leading to a balanced budget in 2020."

Therefore, the general government surplus is expected to decline from 0.7% of GDP in 2018 to 0.3% in 2019. The general government budget is forecast to be balanced in 2020.