Lithuania Central Bank Ups 2011 GDP, Inflation Outlook

2/10/2011

(RTTNews) - Lithuania's economy may grow stronger than previously estimated this year amid faster recovery in its trading partners, the central bank said Thursday.
In its quarterly economic outlook report, the central bank revised up this year's gross domestic product forecast to 3.3% from 3.1% estimated in November. Economic activity is expected to pick up next year with the GDP rising 4.1%.
Rising external demand, boosted mainly by favorable economic conditions in its neighboring Baltic states as well as Europe's major economies, had a positive impact on the indicators of the tradable sector of Lithuania, especially in industry and transport, the report said.
However, private consumption remains subdued and its recovery is hindered by harsh labor market situations and reserved future expectations that encourage saving.
Unemployment peaked in the second quarter last year, whereas in the third quarter it declined, partially owing to seasonal factors. The bank expects the level of unemployment to decline gradually over the forecast period, in line with the rise of economic activity.
Jobless rate is projected to fall to 16.2% in 2011 from 17.8% last year. This is expected to drop further to 13.9% next year.
The bank also raised the inflation outlook and now sees the rate rising to 2.8% this year from 1.2% last year. In November, the bank had forecast 2.3% rate of inflation for 2011.