Lithuania’s central bank said on Wednesday that a sustained rise in fuel prices from the Middle East conflict could lift domestic inflation to 6 percent this year in a worst-case scenario.
Under a baseline scenario, average annual inflation is projected to reach up to 5 percent, according to a preliminary assessment presented by Bank of Lithuania Governor Gediminas Šimkus.
Šimkus said the baseline scenario suggests no immediate impact on economic growth this year, though gross domestic product (GDP) growth could slow by 0.3 percentage points in 2027.
In the most adverse scenario, GDP growth is forecast to decline by a cumulative 1.5 percentage points over three years, with contractions of approximately 0.6 to 0.7 percentage points in 2027 and 2028.
Šimkus emphasised that the situation in the Middle East remains highly volatile, noting that business impacts and economic forecasts are subject to rapid change.
Newsletter
Every Friday morning.
