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Populiarumas Lietuva

Baltic recovery: Lithuania lifts hopes

Populiarumas Lietuva, I like 80%


Lithuania will always be a minnow in global terms. Yet, with a population of 3.4m, it is easily the biggest of the three Baltic states.

So, when the country announced much stronger-than-expected quarterly economic data on Friday, it raised recovery hopes for the whole region.


Lithuanian GDP registered year-on-year growth of 4.6 per cent in the fourth quarter, easily beating the consensus forecast of 3 per cent.

Danske Bank responded on Monday by lifting its forecasts for neighbouring Latvia and Estonia, which announce fourth quarter GDP figures next week.


“The Baltic economies are recovering from the recession relatively rapidly,” said Danske, reinforcing the impression that, having been among the first European countries hit by the global credit crunch in 2008, the Baltic trio are now beating other nations out of the crisis.

Lithuania had appeared to be something of a laggard when its economy grew by just 1.2 per cent year-on-year in the third quarter, compared with 5 per cent by Estonia, the regional star-performer. Even Latvia, propped up by a €7.5bn bail-out from the International Monetary Fund, looked to be recovering faster, with 2.7 per cent growth.


But last week’s fourth-quarter numbers suggest Lithuania’s weightier economy has finally started to accelerate.

The Baltic recovery has so far been driven mainly by exports, with all three countries benefiting from proximity to some of Europe’s best-performing economies: Germany, Sweden, Finland, Poland and Russia. However, Danske said it expected increasing domestic demand to take a bigger role in the recovery this year.


All three Baltic states still have plenty of challenges to negotiate. Estonia is struggling to contain rising inflation after its entry into the euro on January 1. Latvia and Lithuania face more painful fiscal tightening to bring their budget deficits down from 8 per cent of GDP last year as they aim for euro entry in 2014. Unemployment remains high across the region.

Yet, unlike in some other corners of Europe, at least the Baltic trio can say with a reasonable degree of confidence that things are looking up.





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