Contracted export market and Russian economic stagnation last year slowed Lithuania's gross domestic product growth, but this year the growth will be twice as fast and will rise from 1.6 to 3.2 percent, announces professional services company EY in the latest publication the Euro Forecast.
© DELFI / Orestas Gurevičius

Jonas Akelis, EY partner in the Baltic countries predicted that Lithuania‘s GDP will grow by 3% -3.5% annually to 2019 and will be ahead of average eurozone growth rates.

Ernst & Young experts believe that in the medium term exports to the EU will gradually recover, with the benefits of eurozone membership and public sector consumption growth stimulating the economy of the country.

“Labour costs are still relatively low, improved infrastructure and reduced currency risks created better conditions for Lithuania to strengthen ties with the eurozone countries. However, there still are some threats – first of all the situation in Russia is not getting better, and the global economy is still in a fragile state,” said Akelis.

Improving national competitiveness indicators are helping Lithuania to attract foreign investment, said Akelis. Lithuania rose by 5 places and now ranks 36th in the World Economic Forum's competitiveness rankings for 2015 that assessed 140 countries around the world.

EY believe investment growth in 2017-2018 will be boosted by a favourable monetary environment. Rising levels of investment should promote the productivity growth needed to maintain wage growth according to EY, with consumption projected to rise by about 4%.

Ernst & Young are forecasting that between 2016 and 2019 inflation in Lithuania will be average at around 2%, higher than the projected 1.5% eurozone average.

The country's budget deficit is expected to remain at 1% due to the projected faster GDP growth in 2016 – 2018 period.

Unemployment rates in Lithuania should continuously decline, according to EY. The firm expect that this year the unemployment rate will shrink to 9.6%, and in 2019 it will fallen dramatically to 5.6%.

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