2024-07-30 09:50:22
However, in their assessment, the forecasts for all sectors are not so positive, as some of the exporting and wholesale trade sectors, on which long-term economic growth depends, are still not recovering.
Export prospects are bleak
Swedbank’s Chief Economist Nerijus Mačiulis notes that this year’s economic recovery is mainly influenced by the growth of population consumption and state investment. However, he warns that long-term growth depends on business exports, which are still not recovering.
“Some exporters – producers of vehicles, plastics, fertilizers – are also recovering from the bottom, but many other industries and the transport sector are still waiting for demand to recover,” N. Mačiulis says in a press release.
“Many Lithuanian companies successfully overcame energy price, geopolitical and high interest rate shocks, the number of bankruptcies remained close to historical lows, and the number of jobs – close to record highs. However, in some industries, such as those highly dependent on labor costs or demand in export markets, respite is not in sight,” he comments.
N. Mačiulis also warns – the world is seeing more and more protectionism, which reduces Lithuania’s opportunities to export outside the EU.
The economist notices that companies’ desire and opportunities to invest in development are improving. According to him, this can be seen from the accelerated growth of the business loan portfolio, which is 8.7 percent. higher than a year ago.
Good mood, according to N. Mačiulios, can be seen in consumer confidence in the country’s economy and consumption. In his opinion, low inflation and rapidly growing incomes contributed to this.
“Retail trade is 3.9 percent this year. higher than a year ago, the consumption of almost all goods and services is increasing, and only the food service sector is experiencing a decline. It is likely that consumption growth will not slow down, it will be stimulated by further rising wages,” he explained.
The wholesale sector contracted
SEB bank economist Tadas Povilauskas says that the greatest influence on GDP growth was the higher value created by the industrial sector. According to him, although production is stabilizing, the consequences of a stronger recovery gap will be seen in the second half of the year.
“The correlation between the output sold by industrial companies and the added value created is high. During the quarter, the production of chemicals, plastic products and metal products grew more, but the production of food products and beverages decreased slightly. The production of furniture and wood products has stabilized, but there is no stronger recovery,” comments T. Povilauskas.
“In the second half of the year, the annual change in industrial production should remain positive, but sluggish demand in key export markets prevents a stronger recovery,” he predicts.
The economist notes that the volume of wholesale trade decreased in the second quarter. Also, according to him, the positive impact of the construction sector on the economy is weakening.
“Unlike retail trade, the volume of wholesale trade decreased in the second quarter and did not have a positive impact on GDP. In the last quarter, re-export activity to the east was still shrinking,” he comments.
“Last year, the economy was protected from a larger GDP decline by the fact that the added value created in the construction sector greatly increased public and private investments in infrastructure facilities. However, the growth peak of such investments has already been reached this year,” the economist explains.
In the West, there is a sluggish appetite for consumption
At that time, the chief economist of Šiaulių bankas, Indrė Genytė-Pikčienė, emphasizes that, unlike last year, economic growth in 2024 the exporting manufacturing sector contributed to economic development. But, in her opinion, the recovery of the manufacturing sector is inhibited by the sluggishness of the Western European market.
“The real volume of production is growing for the second quarter in a row, energy-intensive branches of production – the chemical industry, the production of plastic and rubber products – are showing a vigorous rebound, the curves of changes in the volume of wood and furniture production have climbed into positive territory,” explains I.Genytė- Pikčiene
“Lithuanian industry has so far successfully managed to exploit competitive advantages and niches in Western value-added chains, even when the markets themselves are not growing. However, in the West, especially in Germany, there is a decline in export orders, and consumer appetite remains sluggish,” she notes.
According to her, in the second quarter, the Lithuanian economy relied even more firmly on household consumption, which is likely to continue to grow.
“In the second half of the year, favorable external signals are likely to increase. “Cutting interest rates, improving consumer and corporate expectations, and gradually recovering demand from export markets will fuel a faster recovery of outward-oriented sectors,” she predicts.
I. Genytė-Pikčienė singles out that the great unknown will remain the transport sector, which is particularly affected by geopolitical factors, the Mobility Package, new tax barriers in European countries and rising labor costs.
The State Data Agency reported on Tuesday, July 30 that the real change in seasonally and day-adjusted GDP compared to 2024. in the first quarter, in the second quarter of this year it was positive and amounted to 0.9 percent.
According to the agency, the performance of construction and industrial companies had the greatest positive influence on the GDP change.
Compared to 2024 and 2023 in the second quarters, without removing the influence of the season and the number of working days, the growth was positive and amounted to 1.9 percent, after removing the influence of the season and the number of working days – 1.4 percent
2024-07-30 09:50:22