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Lithuanian GDP growth revised down for 2015 by finance ministry

Xinhua, March 21, 2015 Adjust font size:

Lithuania's Ministry of Finance cut the country's GDP forecast for 2015 by nearly a full percentage point on Friday, from 3.4 percent to 2.5 percent.

Updated projections are based on new economic conditions, mostly related to external risks, the ministry explained in a statement.

"Due to the deepening conflict between Russia and Ukraine, alongside with mutual European Union's and Russian sanctions, the growth momentum among important Lithuania's foreign trade partners have been slowing down in 2015," the ministry said.

However, more affordable prices for energy resources and weaker euro will reduce the negative impact of external demand to Lithuanian economy in the short term, the ministry expects.

Lithuanian businesses have managed to increase their exports to the new non core markets which let them offset losses in Russian market, the country's public finance body said.

In respite of slowdown, Lithuanian economy will remain among the fastest growing economies in the EU this year, the ministry said.

It forecasts the economy to accelerate to 3.2 percent in 2016 and 3.5 percent in 2017, mostly due to positive domestic demand, discovery of the new export markets and European Union's economy stimulus.

Finance Ministry's projections are more pessimistic than those of Lithuanian central bank, which said earlier in March that the country's GDP would grow 2.7 percent this year, down from the bank's earlier 3.1 percent projection. The Bank of Lithuania pointed to significantly deteriorating situation in Russia when explaining the slower pace of economic growth.

Lithuanian economy advanced by 2.9 percent in 2014. Endit