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Swedbank optimistic about Lithuanian GDP growth, forecasts unchanged

Xinhua, January 27, 2016 Adjust font size:

Swedbank, the second largest bank in Lithuania, forecast the country's economy to grow by 3.3 percent this year, nearly double of its projections of last year's 1.7 percent growth rate, Swedbank announced on Tuesday.

In 2017, Swedbank expects 3 percent GDP growth for Lithuania. The bank's projections for this and next year remained unchanged from previous forecasts.

Lithuania surprisingly well withstood slowdown of exports to Russia's market, Nerijus Maciulis, Swedbank's chief economist, was quoted as saying by local website vz.lt.

Despite of deteriorating trade relations with the former large export partner, overall Lithuanian good and services exports grew by 0.6 percent in 2015, compared to 2014.

According to Maciulis, domestic demand, fuelled by growing confidence of consumers, and business investments will remain the main economy drivers in Lithuania this year.

"After last year's seismic shifts -- exports of Lithuanian goods to Russia shrank by 50 percent -- GDP growth is set to double in 2016, before cooling off somewhat in 2017," Swedbank said in its Economy Outlook January 2016.

"Upcoming parliamentary elections have encouraged the government to embark on a spending spree, further stimulating growth, but at the cost of a larger budget deficit," it added.

Lithuanian national elections will take place in early October this year.

Swedbank's GDP projections for this year are among the most optimistic compared to other institutions.

"Despite a negative global sentiment at the beginning of this year, we see little reason to be worried about the prospects for the Lithuanian economy," the bank said.

"Even if another global recession occurs, Lithuania would not suffer the same damage as in 2007-2008; at that time, GDP contracted by 15 percent, today the negative impact would be at least double-less as we are more financially immune," Maciulis noted.

The country's Ministry of Finance expects Lithuanian GDP to grow by 3.2 percent this year, while Lithuanian central bank and European Commission's projections coincide at 2.9 percent. SEB, the largest bank in Lithuania, expects the country's economy to expand by 2.8 percent this year and advance to 3.2 percent in 2017. Endit