2021.09.27 15:00

Belarus sanctions dampen Lithuania’s economic recovery plans

Jonas Deveikis, LRT.lt2021.09.27 15:00

Lithuania’s central bank has decreased its projections for GDP growth in Lithuania next year, citing sanctions against Belarus and decreased consumer spending.

The economy is projected to grow 4.9 percent in 2021 and 3.5 percent in 2022. In June, Lithuanian Bank (Lietuvos Bankas) said the economy should grow 5.1 percent in 2021 and 4.1 percent the following year.

“This has to do with a smaller growth in exports, which [will] be determined by sanctions against Belarus,” said Gediminas Šimkus, head of Lithuanian Bank. “However, this should not have a strong impact on domestic demand. Forecasts for both investment and consumer consumption are more favourable than in June.”

Read more: How painful will Belarus sanctions be for Lithuanian economy?

If Lithuania was to completely restrict trade relations with Belarus and China, the country’s GDP growth per year would decrease by 1 percentage point.

“Lithuania’s exports to Belarus make up 4 percent of the country’s exports, with big part of it being re-exported goods and transport services,” said Šimkus. “Lithuanian products make up a small part. When looking at the effects on the economy, the largest part of these effects would come next year.”

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