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Roundup: Lithuania's economy "surprisingly resilient" among global turbulences: Swedbank

Xinhua, August 25, 2015 Adjust font size:

Lithuania's economy looks "surprisingly resilient" in the context of the current macroeconomic turbulences among the emerging markets, Lithuanian Swedbank said Monday.

However, the bank revised Lithuania's GDP growth forecast this year by 0.5 percentage points to 1.8 percent and by 0.2 points to 3.3 percent next year, mostly due to overall exports decline.

Nerijus Maciulis, Swedbank's chief economist in Vilnius, noted that Lithuania is reducing the country's dependence on Russia's market and improving exports' performance within the euro zone.

"Russia currently ranks only 15th among the most important export markets for Lithuanian origin goods; the share of Lithuanian origin exports to Russia now amounts to 2.2 percent, even less than to Ukraine," Maciulis was quoted as saying by local website vz.lt.

According to the economist, Lithuania lacks competitiveness in the main markets of South-Eastern Asia, therefore, the euro zone should remain in the main focus of Lithuanian exporters.

In the first half of this year, compared with the same period in 2014, Lithuania increased its exports to Sweden by 9 percent, to France by 21 percent, to Spain by 47 percent, Maciulis noted.

Together with re-exports, Russia remains to be the largest Lithuania's exports market, with a 13.4 percent share of all exports. Overall exports from Lithuania to Russia abated by 38 percent in the first six months this year.

The euro zone takes two thirds of all Lithuanian exports, while exports to India, China and other South East Asian countries amounts to just 1.5 percent.

Overall Lithuanian exports decreased by 1 percent in the first half this year.

Due to positive changes in Lithuanian exports structure, Lithuania avoided potential problems in the labor market so far, the bank said.

Swedbank forecasts that unemployment in the country will amount to 9.3 percent this year and will diminish to 8.3 percent in 2016.

"Unexpectedly, unemployment rate decreased at faster pace than anticipated," Maciulis said.

The bank estimates that average real wages will grow by 5.6 percent in 2015 and by another 4 percent in 2016. It expects that average annual inflation will be negative at minus 0.8 percent this year, but will accelerate to around 2.5 percent in 2016.

Turbulences in the emerging markets, due to low oil prices and the ending era of the record-low interest rates, are the main challenges for the global economy, Swedbank's economist said.

Russia and China will remain among the most watched economies in the nearest future, the bank projects.

Swedbank predicts the euro zone's economy to grow by 1.3 percent and 1.9 percent this and next year respectively. Endit