As the Lithuanian Statistics Department announced on 27 September Lithuania’s GDP in third quarter of 2009 against third quarter of 2008 dropped by 14.3 percent.  However, the Department informed that the GDP against second quarter of 2009 increased by 13 percent while the seasonally adjusted rise was 6 percent.  The Statistics Department also announced that the annual decline in the second quarter was revised up to 19.5 percent, from 20.4 percent.

Such GDP results for the third quarter has exceeded all analysts’ expectations and gave a cause for cautious optimism that the annual GDP decline in 2009 will be lesser that it was projected.  The Finance Ministry projects an 18.2 percent economic decline in Lithuania in 2009.

Lithuania’s Prime Minister Andrius Kubilius expressed his cautious optimism but also warned that the Cabinet will further implement necessary measures to continue with structural reforms.  The Prime Minister stated to the Public Broadcaster ‘Over the last three months the economy ceased to fall, and since the second quarter grew by 6 percent. This clearly indicates that the economy has reached the bottom. By joining efforts we are ready to meet the hardship and problems of the crisis. However, the better results should not loosen up our efforts – the government intends to implement the necessary fiscal consolidation and structural reforms.’

The chief analyst with Lithuania’s SEB bankas Vilija Tauraite said to BNS that ‘The first impression is very good since the rate has exceeded the expectations of all market players. The result of 14.3 percent would truly seem not too bad. Moreover, the second quarter estimate has been revised up.  We believe that the GDP decline will continue to slow down, which will also be the case in 2010. However, the slowdown of decline will not be sharp, yet the situation will continue to improve.  SEB bankas forecasts a 15.5 percent (decline in 2009). The latest data turn this forecast into rather cautious optimism although three or four months ago it seemed rather optimistic.’  The analyst added that the annual decline in the final quarter of 2009 could be smaller – of some 10-11 percent.

Tauraite from SEB stated to VZ.lt that ‘Thus, under the implicit definition of a recession (two quarters of GDP decline in a row), Lithuania is beginning to climb from the deepest downturn. However, the third quarter is always seasonally the best, so before the publication of ‘official’ end of the recession, it is necessary wait at least 1-2 quarters.’

By mid September The Danske Bank analysts projected some 20 percent Lithuania’s GDP decline.  The Danske Bank chief Baltic analyst Violeta Klyviene stated to BNS ‘The results have surprised in the most positive way – third-quarter growth compared with the second quarter is really impressive although such rates could not have been expected based on retail figures.’ Klyviene would not forecast what GDP results could be expected in the final quarter, although said that full-year decline could reach 15-16 percent.

The Chief analyst from the DnB Nord Bank Rimantas Rudzkis was less optimistic “The life in summer is much easier than in winter, so people, even without a job or part timers allow themselves more” – explains the analyst to Alfa.lt. The real situation will show in the fourth quarter (and in any event the most difficult is the first). “In fact, if we will have a better than anticipated fourth quarter, only then it will be possible to say that the bottom was reached. In the meantime, I am cautious. There are some odds that the bottom has been reached, but I would not claim this with confidence.’

The analyst is convinced that February 2010 will be hardest in Lithuania ‘This will be the time with highest unemployment rate and the lowest level of consumption. We will see then how we will manage to overcome this ditch.’