Along with consumption, the value of deposits held by Lithuania’s banks is increasing. However, the purchasing power of Lithuanians is thought to be static, while the country’s emigrants have been transferring less and less money to their relatives at home. According to “Lietuvos žinios”, fellow Lithuanians are saving and spending money earned in the shadow market, delfi.lt reported on August 2.
Lithuania’s Gross Domestic Product was up 2.1% year-on-year in the second quarter of 2012, but analysts have drawn attention to the fact that the figure was considerably affected by domestic consumption. Retail sales (excluding vehicles) in the April to June period were up 4% in comparison to the same period in 2011, however, these figures show a distorted view of the Lithuanian economy.
Rokas Bancevičius, a senior analyst at DNB Bank said, “This kind of growth in consumption is surprising for several reasons. Firstly, the average wage has been decreasing for the last three years, but the statistics of resident deposits show that savings are increasing. Secondly, the value of deposits belonging to households held in the financial institutions in June 2012 was almost 1% larger than a year ago”.
Bancevičius added that emigrants’ remittances have a relatively small impact on the Lithuanian economy, noticing that the sum transferred in the first quarter of 2012 was the smallest since the beginning of 2010. It is likely that tourists also contribute to consumption figures, alongside increases to social benefits payments and consumer loans. However, the analyst added, “given the negative changes in real purchasing power, and hardly declining unemployment, retail trade growth in volume suggests that part of the population receives income outside of the official statistics”.