As Lithuania is going forward with vaccination, its economy should show robust growth this year and in 2022, according to a review by Swedbank which has raised GDP growth expectations to 3 percent.
In 2022, Lithuania's economy is expected to grow 4.9 percent, up from the previous estimates made in January of 2.7 percent for 2021 and 4.2 percent for 2022.
“We raised Lithuania's GDP growth forecasts by 0.3 point,” said Swedbank chief economist Nerijus Mačiulis on Tuesday. “Next year, thanks to expected mass immunity and a full reopening of the service sector, we expect 5-percent growth across the Baltic countries.”
The improved expectations are due to the roll-out of vaccination, he said, and will depend on how successfully the country immunises its population in the coming months.
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“We believe it's likely we'll avoid another lockdown thanks to vaccines,” Mačiulis said.
In general, Lithuania and the other Baltic states have suffered relatively mild economic hits during the pandemic. compared to other European countries.
“It is partly because they are least dependent on incoming tourism, used proper fiscal policies, and have industry that wasn't affected or was for a very short while,” according to Mačiulis.
Swedbank also expects wages to grow 7 percent this year and another 6.4 percent in 2022.
“The contributing factors [to wage growth] are the raise in the minimum wage, growing pay in the public sector, although we see the private sector did not entirely halt wage increases either,” he said.
Meanwhile, Swedbank expects annual inflation to be 2.3 percent this year, up from January's forecast of 2 percent.
“This has to do with global trends, appreciating raw materials, transportation costs, but also wage increases that are an important factor in the service sector,” said Mačiulis.
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