Lithuania confirms impressive GDP growth with 6.9-per-cent rise

VILNIUS - The Lithuanian economy continued its impressive rise in 2006, with fourth-quarter GDP growth hitting 6.9 per cent year on year, the national statistics agency announced on Tuesday.

By (DPA)

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Published: Wed 28 Feb 2007, 5:06 PM

Last updated: Sat 4 Apr 2015, 8:31 PM

The revised figures - up from a flash estimate of 6.6 per cent - means that provisional full-year GDP growth now totals 7.5 per cent, one of the highest rates in the EU. Only Lithuania’s neighbours, Latvia and Estonia, are expected to post faster growth figures.

The increase was driven by buoyant domestic demand, with construction, financial services, the hospitality industry and communications leading the charge, the agency said.

But an accelerating trade deficit - with imports growing by 12.2 per cent against export growth of 5.3 per cent - is likely to stoke fears over the economy’s long-term sustainability.

And wage growth of 19.8 per cent is likely to add to inflationary pressures, another destabilizing factor.

Inflation has been a troublesome topic in Lithuania since May 2006, when EU finance chiefs rejected the country’s application to join the euro because its inflation was just a tenth of a point above the 2.6 per cent needed for entry.

Since then inflation has crept up to 4 per cent, driven by rapid economic growth and increases in administratively regulated prices.

Lithuania’s economy, the largest in the Baltic states, is nonetheless thought to be growing at a more sustainable rate than its neighbours’. Full-year GDP growth in Estonia is expected to hit 10.9 per cent, with inflation at 4.4 per cent, according to the EU’s central statistical office, Eurostat.

Latvia’s forecast, meanwhile, is for 11-per-cent growth and 6.6-per-cent inflation, according to Eurostat. Local sources say that these forecasts are too low, and the real figures could be closer to 12 per cent and 7.5 per cent respectively.



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