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Lithuania's economy will grow, but at a slower pace than predicted, according to European Commission forecasts with GDP growing by 3.1% in 2017 instead of the 3.4% previously predicted.

However, the Commission said Lithaunia‘s economy is strengthening, and its growth rate is the fastest in recent years. Lithuania‘s unemployment rate should shrink to 7.8% this year and fall further to 6.4% in 2017.

Strict labour regulations, labour force decline, combine with relatively job creation drive wage growth, said the European Commission.

Eurozone growth on the other hand continues to be slugglish. The Commission project eurozone GDP will grow by 1.6% this year and 1.8% in 2017. Across the whole European Union growth will be slightly higher at 1.8% in 2016 and 1.9% in 2017.

Lithuania‘s rapid recovery has been strongly influenced by strong domestic consumption and a recovery in exports according to Brussels, which is the result of reorientation from Russian to other non-European Union countries‘ and the Western and Northern European markets.

That is creating a strong export performance, although Russia‘s prolonged recession and economic stagnation is still a high-risk factor for Lithuania.

High demand from its main European Union trading partners will allow Lithuania to maintain a relatively high export rate of growth into 2017.

However, Lithuania will see investments decrease as European Union structural funds decline. It is expected that inflation in Lithuania will be positive in 2016 due to rising services sector and energy prices, inflation in 2017 is to continue on an upward trend.

DELFI

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