Milda Aleknonytė | The Lithuania Tribune
In the second quarter, Lithuania’s GDP growth was 2.1%, compared to the same period last year. Slight disappointment is felt among banks, all predicted a growth somewhere between 2.5 and 3%.
Some fear this may be the first sign of an upcoming second financial crisis, as GDP growth has been slowing down consecutively for three quarters in a row now. But what does this 2.1% tell us? The GDP obtained in Lithuania in the second quarter is 297.9 million Litas greater than in the second quarter of 2011. The Central Bank of Lithuania predicted in February that the annual GDP growth would be 2.2%, adjusting their prediction to a more positive one in May and now expecting a 3% annual GDP growth. The European Commission predicts a 2.4% GDP growth for Lithuania, European Bank for Reconstruction and Development: 2.8%, Ministry of Finance of the Republic of Lithuania: 2.5%. Meanwhile the annual growth in the EU in 2012 is expected to be a mere 1.9%.
Nerijus Mačiulis, senior economist at Swedbank is not worried: „The indicator is not unexpected and does not worry too much, although it was slightly lower than the forecast.“ According to Mr. Mačiulis, there is a logical explanation for the slightly lower GDP than expected. The main factor, which influenced Lithuania’s economic development were repairs at the oil factory, which lasted for five weeks and thus had a negative 0.5% point impact on the GDP growth. Moreover, the tense financial situation in the European Union, unfortunate elections in Greece, elections in France and thus heightened tensions between France and Germany all have a negative impact on corporate reserves. “When tensions about the future increase, companies begin to reduce their reserves” Mr. Mačiulis explains. Reduced reserves in turn slow down the growth.
On the other hand, all countries must stay vigilant, as European economists warn that it is not a question of if, but rather when the next financial crisis is going to hit Europe. While the Lithuanian Industrial Confederation published findings that, based on their industrial indexes, no financial crisis is in sight, President Dalia Grybauskaitė thinks otherwise. As she stated: “The industry calculates quarterly orders, and I’m talking from the strategic and economic perspective. We are talking about different things that cannot be compared.” It must also be taken into consideration, that the industry index is an indexed based on a survey of the 130 largest industry companies in Lithuania and of their evaluation of the current situation and plans for the future. Moreover, it has only been calculated since the 3rd quarter of 2010. Therefore, there is no data as to whether it would have predicted the financial crisis in Lithuania in 2008.