The main engines of growth next year will be expanding domestic consumption and economic recovery of Lithuania’s trading partners.
“This year, Lithuania’s economy grew 1.7% and next year we predict a growth rate of 2.9 percent – nearly twice as big,” Gediminas Šimkus told the LRT radio.
“Households, consumers, people are interested in seeing declining unemployment and growing wages, which are expected to go up approximately 5%.”
The Bank of Lithuania also predicts a 1.4% inflation rate next year, a reversal from this year’s deflation. As it is expected to stay below wage growth, this will increase consumers’ purchasing power.
Another factor favourable to Lithuania’s economic growth is the expected recovery in the eurozone, presenting more opportunities for export to Western Europe.
“As far as East-bound exports are concerned, the situation remains tense and the countries of that region are likely to suffer a downturn, which, however, is likely to be less severe,” Šimkus said.
Other favourable factors include the strengthening of the US economy, which has offset the slowdown in emerging markets, as well declining commodity prices, which boosted consumption in the euro area and, simultaneously, improved the outlook for Lithuania’s exporters.
Previous forecasts by the Bank of Lithuania, published in autumn, foresaw the economy to grow 3.2%.