“This year we see the main boost coming from improved exports, while domestic demand continues to recover only gradually. In addition, it will take several years for the economy to reach pre-crisis levels. All in all, we see the economy turning to meagre growth this year, while a stronger recovery in domestic demand will support the economy to firmer growth in 2011,” the report said.
Unemployment, which hit 18 percent earlier in the year, is set to remain high this year in the country as businesses are reluctant to take on more labour in case of hard times ahead.
“We expect unemployment to turn gradually this year, peaking in the second half of the year. However, a more signifi-cant decline is not expected until 2011, because the labour markets follow the business cycle with a lag, as companies remain cautious on adding on new workforce.”
Nordea echoed other economists saying that the recovery will be led by exports, but added that “if global demand turns out lower than anticipated, also the recovery in Lithuania is likely to be postponed.”