Latvia and Estonia have just felt “hard landing”, but Lithuania still can avoid economic downturn

The Baltic Course
Danuta Pavilenene
July 18, 2008

Lithuania still could avoid the economic stagnation if the authorities manage rising threats well.

According to the Hansabankas experts, Latvia and Estonia have just felt “hard landing”, while Lithuania still can avoid the sudden economic downturn.

The analysts of Hansabankas still left the same forecasts for GDP growth in Lithuania and think that national economy this year will grow 6%, while in 2009 – 5.5%, that is 2-4 times faster than economies of Latvia and Estonia.

Tomas Andrejauskas.

According to Head of Financial Market Service of the bank Tomas Andrejauskas, the more rapid growth of the economy in Lithuania, compared to other Baltic states, was determined by the fact that Lithuanian economy circle did not reach the summit, when the crisis of the capital markets stroke the money supply as well as conditioned the slowdown of the global economy. The analysts of Hansabankas note that national economy is influenced by a bigger number of negative tendencies, so soon we will have to review our forecasts.

“Estonia and Latvia felt the crisis when they were in the highest point of the economy rise, so their landing is more painful than in Lithuania, the cardiogram of our economy does not have such clear rises. Lithuania still holds the opportunity to avoid the stagnation of economy or recession. However, the fact is that these opportunities decrease as the prices for energy raw materials increase on global markets. Decisions taken to encourage consumption and inflation in Lithuania do not help the situation as well,” Andrejauskas says.

The analysts of Hansabankas, evaluating the economic situation in Lithuania, considerably heightened the inflation and unemployment forecasts for the country. The forecast for 2008 inflation was increased from 9.9% to 11.9% and from 6.7% to 8.7% for 2009. The experts of the bank predict that unemployment level in 2008 in the country will reach 5.3% (4.6% were predicted earlier), while 8.9% (earlier 4.9%) for 2009.