Lithuania: Growth more than halves from Q1 in Q2
GDP reading: GDP growth waned to 1.3% year on year in Q2, from 3.0% in Q1, according to seasonally and calendar-adjusted data. The moderation was weaker than the 1.9% rise reported in the preliminary release and was driven by weakening private consumption, fixed investment and exports. On a seasonally and calendar-adjusted quarter-on-quarter basis, economic growth ebbed to 0.7% in Q2, following the previous period’s 0.9% increase
Drivers: Looking at the details of the release, household spending increased 2.7% in the second quarter, which was below the first quarter’s 3.5% expansion. Moreover, fixed investment contracted 4.8% in Q2, marking the worst reading in four years (Q1: +3.3% yoy). Meanwhile, government consumption improved to a 0.5% increase in Q2 (Q1: +0.1% yoy).
On the external front, exports of goods and services worsened, contracting 3.0% in Q2 (Q1: +1.1% yoy). In addition, imports of goods and services declined at a steeper rate of 2.1% in Q2 (Q1: -0.9% yoy).
Panelist insight: EIU analysts commented on the outlook:
“The data so far support our full-year real GDP growth forecast of 2%; we expect export growth to flatten out on the back of modest growth in the EU, with rising domestic demand in Lithuania fuelling imports. […] The risks to this forecast are nonetheless considerable. Foremost among them for Lithuania are geopolitical risks relating to Russia, but also slower than expected growth in the EU, on which Lithuania’s export recovery is largely premised.”