Lithuania: GDP – the slow down already started

Mon, Jan 28 2008, 16:34 GMT
by Violeta Klyviene

Danske Bank A/S


Today, Lithuania’s statistics office announced its preliminary estimates for GDP growth. Over the last quarter of 2007, GDP rose an additional 7.9% compared to the same period in 2006 – significantly below our estimates of 10%-11% y/y.

The significant slow down compared to the third quarter results (10.8% y/y) may be explained by the “one – off” measure – of a rather more subdued performance of the agriculture sectors as well as “fundamental” reasons. A deceleration in retail trade and industrial production growth rates at the end of 2007 shows some sign of coolness in the economy, which stems mainly from the supply-side. Continuing tensions in the labour market imply that further growth of employment is coming to a halt, thus wage increases are outpacing productivity growth and thereby are resulting in additional constraints on production.

We expect a continuation of the slowdown in 2008, which is linked to negative changes in the global environment, tightening of credit conditions and further, rising cost and price pressures.

Published on  Mon, Jan 28 2008, 16:38 GMT

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

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