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Lithuania's economy is expected to maintain growth of 3.0 percent in 2015, despite a fall in exports to Russia. Domestic demand is set to remain the main growth engine, as employment and real disposable incomes rise. Inflation stays low and public finances improve slightly, the European Commission said in a statement.
EC forecasts 3-percent growth for Lithuanian economy in 2015
© DELFI / Kiril Čachovskij

Lithuania's real GDP is forecast to grow 3.0 percent in 2015 and 3.4 percent in 2016, despite continued geopolitical uncertainty and the expected downturn in Russia.

The unemployment rate is forecast to continue falling from 9.5 percent in 2014 to 8.7 percent in 2015 and 7.9 percent in 2016. This is expected to support disposable income growth, while unit labour costs are set to increase over the forecast horizon.

In 2015, inflation is expected to remain low, with falling energy prices partially offsetting price increases in the service sector. Overall, HIC inflation is expected to amount to 0.4 percent in 2015 and 1.6 percent in 2016.

In 2015, the general government deficit is forecast at 1.4 percent of GDP. Tax revenues are set to improve on the back of continued economic growth. On the expenditure side, and in line with the 2015 budget, defence and social spending are expected to increase by 0.3 percentage points and 0.2 percentage points of GDP respectively.

Under a no-policy-change assumption, the general government deficit is expected to reach 0.9 percent of GDP in 2016.

General government debt is expected to increase from 39.0 percent of GDP in 2013 to 41.8 percent in 2015, due to the pre-financing of bond redemptions, and to fall to 37.3 percent of GDP in 2016 as the pre-financing ends.

Finance minister: EC forecast shows stable tendencies for Lithuania's economic growth

Minister of Finance Rimantas Šadžius believes that the European Commission's forecast has projected stable economic growth for Lithuania.

"The EC projections are favourable to Lithuania and demonstrate stable economic growth tendencies. However, in order for the country's economy to grow soundly and sustainably, it is crucial to take advantage of the opportunities provided by the euro, to expand in the existing and find new export markets and to appropriately invest European Union structural support funds, of which there will be more this year due to junction of financing periods," the finance minister said.

The Bank of Lithuania projects 3.1 percent GDP growth in 2015, whereas the Lithuanian Government based the state budget expecting 3.4 percent GDP growth.

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