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SEB bank cuts Lithuania's GDP growth forecast to 1.8 pct this year

Xinhua, September 29, 2015 Adjust font size:

Lithuania's SEB bank on Tuesday revised downwards the country's GDP growth forecast for this year by 0.8 percentage points to 1.8 percent, mostly due to a slowdown of exports.

"Lithuania's growth rate significantly slowed this year compared with 2014. The decrease of exports was the main reason for the slowdown," the bank said in its Lithuanian Macroeconomic Overview report.

Gitanas Nauseda, senior adviser to the SEB president in Vilnius, noted that domestic demand helped the economy to maintain momentum.

"Residents managed to withstand the mood of geopolitical uncertainty and returned to usual behavior, in terms of active buying of both food products and other goods," Nauseda told reporters.

Though many of the country's residents believe prices went up this year more than official statistics show, he said: "Even the most pessimistic people acknowledge that the euro was introduced smoothly and did not cause major disruption."

SEB expects the Lithuanian economy to grow by 2.8 and 3.2 percent in 2016 and 2017, respectively.

Lithuania's economy is more exposed to Russia's imports embargo, therefore, the country's GDP growth is forecast to be the slowest among three Baltic States, with Estonia's economy to expand at 2.2 and Latvia's at 2.4 percent, SEB said.

The bank expects that the new 2014-2020 period of EU structural financing will contribute to accelerated Lithuania's growth in the coming years.

The bank's analysts forecast that average inflation in the country will be negative this year, at minus 0.7 percent. They expect that inflation will move back into positive territory to reach 0.3 percent next year and will quicken to 1.2 percent in 2017. Endit