The European Commission sees Lithuania's gross domestic product (GDP) contracting by 7.9 percent this year due to the COVID-19 pandemic and in particular its dampening effect on domestic demand.
European Commission: Lithuania's GDP to shrink 7.9 pct this year
© Reuters / Scanpix

However, the country’s economy should rebound by 7.4 percent next year, the Commission said in its Spring 2020 Economic Forecast.

According to the Commission, the heaviest blow to Lithuania’s economy will be dealt in the second quarter of 2020. However, it expects GDP growth to stage a strong rebound in the third quarter.

Domestic demand is forecast to be negatively affected by declining household income and, as a consequence, limited possibilities to borrow.

Export recovery is projected to depend, in the short term, on the economic strength of Lithuania’s Nordic trading partners.

As estimated by the Commission, private consumption in Lithuania will fall by 9.9 percent this year, and gross fixed capital formation (investment) will shrink by 5 percent whereas public consumption will increase by 1 percent.

The country’s exports and imports should decline by 12.5 percent and 12 percent, respectively.

Lithuania's HICP inflation is expected to slow to 0.8 percent this year amid decreased demand and lower energy prices, before accelerating to 1.5 percent next year.

The unemployment rate is projected to rise by approximately 3 percentage points, to 9.7 percent this year, before going down to 7.9 percent in 2021.

The implementation of the fiscal stimulus plan and the impact of automatic stabilizers are expected to push the general government deficit to 6.9 percent of GDP in 2020. In 2021, however, the ratio should fall to 2.7 percent of GDP.

Meanwhile, the debt-to-GDP ratio is forecast to rise from 36.3 percent of GDP in 2019 to approximately 48.5 percent in 2020 due to substantially larger financing needs. In 2021, the ratio is expected to inch down to 48.4 percent of GDP.

As estimated by the Commission, the euro area’s GDP will fall by 7.7 percent this year before rebounding by 6.3 percent in 2021. Meanwhile, the European Union’s (EU) economy will contract by 7.4 percent this year and recover by 6.1 percent next year.

It is prohibited to copy and republish the text of this publication without a written permission from UAB „BNS“.
|Populiariausi straipsniai ir video

Minister: budget deficit to narrow, debt-to-GDP ratio to stabilize in 2021

The Lithuanian state's 2021 budget bill has been drafted with the aim of reducing the general...

One in 3 Lithuanians feels anxious about money

Thirty-nine percent of Lithuanians feel anxious about their finances every day, which adversely...

Simonyte: key budget issue is what to do with borrowed money (1)

The key question related to Lithuania's next year budget is what will be done with borrowed money...

Minister: Lithuania financially capable of withstanding another coronavirus outbreak

Lithuania would be financially capable of withstanding another coronavirus outbreak, Finance...

A new commercial bank has launched operations in Lithuania

PayRay , a Lithuanian financial sector company, has started a new page of its business service...

Top news

Only every 2nd resident would get coronavirus jab

Only half of Lithuanian residents would get a coronavirus vaccine once it is become available,...

Energy Minister: Moscow's note shows Baltics are taking right steps

Moscow 's call on Lithuania to review a new draft methodology for electricity trade between the...

China expresses resentment over Freedom Party's Taiwan independence support

The Chinese Embassy in Lithuania has on Friday expressed its resentment over the Lithuanian...

Nauseda urges to refrain from family gatherings on long weekend

Lithuanian President Gitanas Nauseda on Friday called on people to refrain from family gatherings this...

Health minister says nationwide quarantine possible

Lithuanian Health Minister Aurelijus Veryga on Friday did not rule out introducing a nationwide...

|Maža didelių žinių kaina