"Fast economic growth will not last forever as the international environment is worsening and international organizations are cutting their estimates. (…) Those risks will undoubtedly affect the Lithuanian economy. (…) Our economy will grow next year as growth will be supported by internal consumption but growth will slow and be more fragile. So, we all need to be cautious," Finance Minister Vilius Sapoka said when presenting the latest macroeconomic forecasts on Wednesday.
The ministry raised the GDP estimate for this year to 3.7 percent, from 2.6 percent in March, bur growth will slow in the future.
The spring GDP growth estimate of 2.4 percent was left unchanged, just as the ones for 2021 and 2022 when the growth of 2.3 percent is expected.
Experts from the ministry cited positive factors, like good migration tendencies, faster growth in direct foreign investment, strong internal and external demand and incentives from the European Central Bank.
Meanwhile, Brexit, growing signs of protectionism, monetary policy changes, geopolitical tensions and fluctuations in global financial markets were named among negative factors.
Vice Minister of Finance Migle Tuskiene said the Brexit process and growing investments were behind the significant change in the GDP estimate for this year from the spring one.
"When evaluating and updating estimates, we took into account both factual results and risks. First of all, what we had in March was that we included in the calculation the assumption that Brexit would take place in late March as we had a very clear date. (…) Factual results also affect our forecasts. Investments are growing faster," she said.
In her words, the inflation forecasts were updated only slightly.
"Over the whole estimated period, we do not expect any major changes in price growth as inflation will stand around 2 percent," the vice minister said.
Lithuania's average annual inflation rate, as measured by the EU Harmonized Index of Consumer Prices (HICP), is forecast to stand at 2.4 percent this year, up by 0.2 percentage points from the March forecast, and the 2020 forecast was increased by 0.1 percentage points to 2.3 percent.
The Finance Ministry forecasts that the change in the average monthly salary before tax will stand at 8.3 percent this year, up 0.3 percentage points from the spring estimate, and the 2020 forecast was increased by 1 percentage point to 7.4 percent.