aA
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.

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

Number of workplace deaths down by one-third

The number of workplace deaths in Lithuania shrank by 33 percent, or 7 cases, in the first half of...

Unique integrated health monitoring system for stroke survivors patented in Lithuania

Group of biomedical engineers from biotech company Gruppo Fos Lithuania together with researchers at...

President hopes for fair distribution of EU recovery fund

Increased financing for the European Union’s (EU) cohesion policy is one of the biggest expectations...

Lithuanian Airports regain their tempo

The three international airports of Lithuania summarised the results of the second quarter and...

Vilnius approved works of arrangement of the environment of the Palace of Concerts and Sports

The Vilnius City Council approved a joint activity agreement between the Vilnius City Administration...

Top news

Minister: facemasks to become mandatory again if coronavirus cases spike

The Lithuanian government would consider making facemasks mandatory in public again if coronavirus...

Nauseda congratulates Duda on re-election

Lithuanian President Gitanas Nauseda on Monday congratulated Polish President Andrzej Duda on his...

5 new coronavirus cases

On Sunday, 5 new coronavirus cases were recorded in Lithuania. Overall, it adds to 1874 confirmed...

Polish voters in Vilnius support Trzaskowski by large margin

A large majority of Polish citizens who cast their votes in Vilnius in Poland 's presidential...

Grand Courtyard of the Seimas opens to the public

From Monday, 13 July 2020, the Grand Courtyard of the Seimas will be opened to the public....

|Maža didelių žinių kaina