Country Economic Forecasts > Lithuania

Despite a slight quickening in annual GDP growth to 1.8% in Q3, our forecast for full-year 2015 has been cut to 1.6%, restrained by slower investment and export growth, in part due to the deep recession in Russia. The pace of growth is still expected to pick up in the coming years as exports recover and new Eurozone opportunities start to open up, together with a renewed rise in public consumption as fiscal austerity is relaxed. But our forecast now shows growth of 3-3.5% in 2016-18, rather slower than we expected three months ago.A renewed rise in the fiscal deficit has helped to combat the slowdown this year, and a further rise in public spending (not matched by revenue growth) proposed for election-year 2016 has drawn EU criticism for testing Stability Pact limits. Faster growth should keep the deficit close to 1% of GDP in 2016-18, limiting its inflationary impact; but the persistent gap, together with strong imports, will see the current account deficit rise to about 3% of GDP by 2018.