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Lithuania Q4 GDP tops f'cast, secures full-yr growth

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VILNIUS, Jan 28 (Reuters) - Lithuania's economy grew by a better-than-expected 4.6 percent in the fourth quarter from a year earlier, securing modest full-year growth after a slump in 2009 and pointing to further recovery of the Baltic region.

Gross domestic product in 2010 rose 1.3 percent as the economy slowly picked up after a 14.7 percent contraction in 2009.


In the fourth quarter annual growth was well above a Reuters forecast for 3.0 percent, helped by rising exports, and the economy rose 1.7 percent from the third quarter. That marked a sharp acceleration from a revised 0.3 percent expansion in the previous quarter.

The Baltic state's improving economic prospects are likely to be welcomed as a good sign by Nordic banks like Swedbank (SWEDa.ST) and SEB, (SEBa.ST) which now dominate the Baltic market.


"The Baltic economies have stabilised over the past year and reached sustained quarter-on-quarter growth, but the levels of GDP are still significantly below pre-crisis levels," said Nordea analyst Annika Lindblad.

"Although 2010 as a whole already exceeded expectations, we anticipate a more convincing recovery in 2011-2012," she added.


The government hopes a further pickup in growth will help reduce the public sector budget deficit to the European Union limit of 3 percent of GDP in 2012, enabling it to adopt the euro in 2014. The deficit is expected to come in at 5.8 percent this year.

Lithuania's economic contraction in 2009 was the second worst in the European Union after northern neighbour Latvia, whose economic slide that year was the worst in the world, according to the International Monetary Fund (IMF).




All three Baltic states slashed government spending in 2009 to stop budget deficits expanding and to protect their currency pegs to the euro and avoid a devaluation. Estonia managed the job so well it entered the euro zone at the start of this year.


By Nerijus Adomaitis



Fri Jan 28, 2011

Source: www.reuters.com


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