Lithuania remains among fastest-growing EU countries, according to Hansabankas' experts.
2005-05-20 Back
Lithuania's Gross Domestic Product (GDP) is expected to grow 6.8 percent. It is anticipated by Hansabankas' experts who presented the Baltic countries' macroeconomic review today. According to them, country's GDP in 2006 may see a 6.5% rise.
"Despite a somewhat slower GDP growth in 2004 (6.7% against 9.7% in 2003), Lithuania remains among fastest growing EU countries. Similar trends are believed to be in place in the forthcoming 2-3 years", - states the abovementioned paper.
According to Hansabankas' analysts, the growth of economy of Lithuania and the entire Baltic region can be called "process of catching-up" given that the three countries are among the poorest European Union countries. "However, the fact that these three countries have sustained high growth rates despite unfavorable changes in 15 countries of the European Union, it means there are also other reasons that can be credited to this phenomenon", - states the review.
Last year's Lithuanian economic growth was largely fueled by the rapidly increasing domestic consumer spending and growing investments. 2005 is forecast to see further growth of consumer spending that, in turn, will be driven by rising salaries and wages and the continuation of the bank-lending boom.
In 2004, mean income per a member of the household rose 8.3%, and the real income went up 7% given the inflation level. According to Hansabankas' analysts, salaries are expected to rise by 10 percent and the inflation rate stand at 3.2% in 2005. This anticipated inflation rate can weaken, to some extent, the predicted rise of salaries and wages, however growth of personal income is believed to significantly outpace the rising inflation.
"Inflation may have a deeper impact on low-income families as prices of the "first necessity" goods and services (such as health care, transport, foodstuff, etc.) have been on a steeper rise, compared with growth of prices of leisure services and luxury goods", - says Hansabankas analyst Vidmantas Saferis.
Unemployment rate in Lithuania went down from 12.4% in 2003 to 11.4% in 2004. Hansabankas' analysts predict that it may go down to 10% in 2005 and stand at 9% in 2006. This unemployment's downward trend has so far been explained by the increasing flows of people leaving for other countries to work there.
"The demand of labor force in the domestic market is on the rise. Currently, labor force demand here is stronger than its supply. Besides, it is worthwhile noting that skills and qualifications of unemployed people are low and do not meet potential employers' expectations. Having this in mind, pro-active actions should be undertaken in the preparation of staff training programs and investment of more funds into the development of employee skills", - says V. Saferis. According to him, shortage of labor force is expected to further effect the rise of salaries and wages in certain sectors in 2005.
'The rapidly rising investments into infrastructure and other industries is believed to help the Baltic countries to eliminate certain economic growth obstacles and create a firmer basis for future economic development", states "Hansabankas" macroeconomical review.
Hansabankas belongs to Hansabank Group, the largest financial service group in the Baltics, whose strategic investor is Swedish bank, Swedbank. Lithuanian Hansabankas group consists of Hansa Lizingas, Hansa Gyvybes Draudimas (life assurance company), Hansa Investiciju Valdymas (an investment management company), Baltijos Autolizingas, Hansa Draudimo Brokeris (an insurance brokerage company) and Hansa Valda.
