Even though Lithuania will likely finish the year with a drop in its annual GDP, the contraction is among the smallest in Europe, according to the chief of the country's central bank.
“The result of the first half-year period is a contraction of 0.8 percent. [...] That is certainly a better result than we predicted when everything began,” Vitas Vasiliauskas, the governor of the Bank of Lithuania, told reporters on Monday.
According to the bank's forecasts, Lithuania's annual GDP will contract 2 percent, before growing 3.1 percent in 2021.
Meanwhile in June, the Bank of Lithuania expected the economy to contract 9.7 percent, Vasiliauskas noted.
In the second quarter of 2020, Lithuania's economy dipped 4 percent, which is one of the smallest contractions in the EU, according to the Bank of Lithuania.
Ireland's economy contracted 3.7 percent – the best result in the EU – while Estonia's shrank 6.5 percent, Latvia's 8.6.
According to Vasiliauskas, the milder than expected contraction in Lithuania is down to economic stimulus deployed by the government as well as relatively good economic conditions in Lithuania's main export markets.
Still, there is a lot of uncertainty and economic recovery remains “fragile”, according to Vasiliauskas.
To soften the economic effects of the coronavirus pandemic, the government borrowed and Lithuania's national debt will rise 10 points this year, to almost 50 percent of the GDP, the Bank of Lithuania estimates.