Lithuanian GDP grew an adjusted 3.9% y/y in the second quarter of 2017, according to a flash estimate released by Statistics Lithuania on July 31.

The reading marks a minimal slowdown on the revised seasonally and working day adjusted growth of 4% in the first quarter. However, the expansion maintains the country's economy on track to a much steeper growth trajectory than seen in 2015 and 2016, when growth struggled to exceed 2% y/y.
 
In quarterly terms, GDP grew an adjusted 0.6%, clearly slower than the 1.3% quarterly expansion recorded in January-March. In unadjusted terms, GDP grew 3.9% on the year and 7.5% in quarterly terms.

The annual growth in April-June comes on the back of several positive trends, although Swedbank highlights rapid export growth supported by strong foreign demand. Industrial production expanded 6.7% y/y in the second quarter, while investment “probably” strengthened, Swedbank notes.

Unsurprisingly, household consumption fared strongly as well, supported by robust growth in wages and household lending. That said, based on a somewhat weaker growth in retail trade – at 4.7% y/y - household consumption expansion could have eased somewhat in the second quarter.

With the second quarter indicating continued strong growth, the outlook for the year is positive. 

“Investment growth will strengthen thanks mainly to rising public investments, but also due to faster distribution of EU funds. Exports are expected to stay strong due to improving economic outlook in the main export markets,” Swedbank notes.

“Household consumption growth will be supported by growing wages and lending, but shrinking employment will be a dampening factor,” the bank’s analysts add.