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2020.03.25 13:00

Lithuania's economy may plunge 5 percent this year – Swedbank

BNS2020.03.25 13:00

Lithuania's GDP may shrink 5 percent this year due to the crisis caused by the coronavirus, but the economy is expected to grow as much next year, Swedbank estimates.

The bank's analysts say the GDP might plunge by as much as 10 percent in the second quarter.

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Swedbank economist say the global GDP will contact 2 percent, more than during the 2009 global crisis. The good news, they add, is that the slump will be temporary.

Moreover, Lithuania's economy is well-prepared to withstand the shock.

“Lithuania finished the past decade in a good economic shape. The foreign trade surplus reached a record level last year, the real estate market did not overheat, the government has a considerable financial reserve, household and business savings are record-high, financial commitments are among the lowest in the European Union,” Swedbank chief economist Nerijus Mačiulis says.

Swedbank estimates that the government budget will not be in surplus, as planned now, but will be plunged into a 6-percent GDP deficit.

However, Mačiulis says, it is necessary, since countercyclical fiscal policy will allow avoiding long-term negative consequences.

The eurozone economy will contract 4 percent, and the US GDP will shrink 3 percent this year, Swedbank estimates.

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