The Bank of Lithuania forecasts that this year, due to the worse situation of exporters, the country's GDP will grow 2 percent. The previous forecast was 2.7 percent. Next year, economic development is projected to accelerate to 3.4 percent (the previous projection was 3.5 percent).
© DELFI / Mindaugas Ažušilis

"The economy has been driven forward by domestic consumption; worse performance of the exports to Russia has been adjusting the projections though. This aggravates the situation in some sectors, for example, the transport one. However, even though this year's growth projection was reduced, Lithuania will be among the leaders in Europe in terms of its rate of development," says Raimondas Kuodis, deputy chairman of the Board of the Bank of Lithuania.

In the first months of this year Lithuania's exports to Russia shrank by approximately one-fourth. This was not only due to the aggravated economic situation in this neighbouring country, but the depreciation of the rouble as well, due to which the Russian population can afford buying less foreign goods. The strengthened situation in the European Union, where Lithuania sells most of its goods and services, gives grounds for cautious optimism. The economy in the Old Continent has also been recovering because of the European Central Bank's accommodating monetary policy, which the Bank of Lithuania implements as well.

Lithuania's total exports are projected to pick up by 0.1 percent this year (the previous projection was 3.7 percent). Next year total exports are projected to grow 4.3 percent (the previous projection was 5 percent), Lithuania's central bank said in a report.

The Bank of Lithuania further forecasts that, in 2015, after more than a ten years' break, average annual deflation will be recorded in Lithuania. The general consumer price level is projected to be 0.3 percent lower than last year, the basic reason for that being cheaper fuel, heat energy, gas, and electricity.

The projection for average wages and salaries is an increase of 4.9 percent both in 2015 and 2016.

"Growth in average wages and salaries has been outpacing price growth already since 2013. As this trend will follow this path both this year and next year, the purchasing power of households will increase further," claims Gediminas Šimkus, director of the Economics and Financial Stability Service at the Bank of Lithuania.

It is projected that, in 2015, private consumption will increase by 3.4 percent; while in 2016 the growth rate of consumption will accelerate to 4 percent. Compared to the previous year, the unemployment rate is projected to decrease from 10.7 to 10 percent this year and to 9.2 percent next year.

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