Lithuania cuts economic growth forecasts

The Bank of Lithuania on Monday lowered its economic growth forecasts for 2016 and 2017 amid lessening exports.

Lithuania's central bank expects the economy to grow by 2 percent this year and 2.4 percent in 2017, according to its December macroeconomic forecast.

Economic projections were lowered due to expected slower growth in exports and investments. Although exports are forecasted to continue growing, the Bank sees a risk of less favorable prospects.

Lithuania's exports are expected to grow by 3 percent this year and in 2017, compared to projections of 3.3 percent and 3.5 percent respectively in September's macroeconomic forecast.

Country's imports are forecast to grow by 2 percent this year and by 3.4 percent in 2017. Three months ago, the central bank saw imports growing by 2.3 percent and 4.1 percent respectively.

The Bank of Lithuania also voiced concerns about the long-term impacts of negative demographic trends on the country's economy.

Deputy chairman of the Bank of Lithuania, Raimondas Kuodis, said worrying emigration trends have been visible for quite some time.

"Though the economy has been growing, 22,000 citizens left to work abroad in a year," Kuodis told local media, noting there are no reasons for the trend to change in 2017.

The Baltic State has a population of less than 3 million.

Drained by emigration, the Lithuanian labor market also faces negative consequences caused by falling birth rates in the previous years, the central bank said.

The lack of labor force in Lithuania forces employers to increase wages, thus dampening productivity, it said.

"Wages in the country have been raised probably at the fastest pace in Europe, with employers fighting for employees who have stayed in Lithuania," said the Bank.

It expects wages in Lithuania to grow by 7.3 percent this year and by 5.7 percent in 2017. Endit