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Country Report Lithuania

  • ID: 2138679
  • July 2015
  • Region: Lithuania
  • 25 Pages
  • The Economist Intelligence Unit

In May merchandise export earnings shrank by 1.9% year on year, whereas imports grew by 1.7%, according to Statistics Lithuania. Industrial production data for June showed a more positive picture, with output rising by 6.8% year on year (working-day adjusted). These data suggest upside risks to our forecast of 3.6% industrial output growth this year, but downside risks to our forecast of a trade deficit in 2015 similar in size to that in 2014-we now expect a wider shortfall.

The May trade data represent an improvement from the 4.2% year-on-year fall in exports recorded in April; imports rose by 5.7% year on year that month. However, they bring the cumulative contraction in exports in January-May to 4%, and import growth to 1.3%. The year-to-date deficit on the trade balance therefore widens to EUR1.3bn, from EUR770m in the year-earlier period. In contrast, the June industrial production data show a pick-up from weak growth in the preceding two months. This was driven by 21.6% growth in energy products and 13.4% growth in the manufacture of consumer durables (working-day adjusted).

The weakness of exports so far in 2015 stems primarily from recession in Russia, Lithuania's largest export market. Exports to Russia-which bought one-fifth of Lithuania's exports in 2014-shrank by 35% year on year in May. Partly offsetting this, exports to the other Baltic states rose, and the weak euro supported foreign sales outside the euro zone, with sales to the UK rising by almost 70%. The prime minister, Algirdas Butkevicius, has admitted that the lacklustre first-quarter GDP growth rate stemmed in large part from a failure to diversify export markets away from Russia.

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Country Report Lithuania

Output data improve
Event
Analysis
Impact on the forecast

Note: Product cover images may vary from those shown
Note: Product cover images may vary from those shown

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