2010.08.2709:23:00UTC+00Revised Estimate Shows Stronger Q2 Growth For Lithuania

Lithuanian economy grew faster than initially estimated in the second quarter, Statistics Lithuania said in a latest report on Friday.

The annual growth rate was revised upwards to 1.3% from 1.1% estimated previously. It followed a 2.8% contraction in the first quarter. Gross domestic product turned positive after declining for the past six quarters. In 2009, the economy shrank 14.8%.

On a seasonal and working day adjusted basis, GDP rose 3.2% from the first quarter, revised up from 2.9% reported initially. This compares to a 4% fall in the first three months of the year. Annually, the seasonally and working day-adjusted GDP rose 1.4%.

Unadjusted GDP grew 6.9% quarter-on-quarter during the April to June period, faster than the 6.6% growth reported initially. In the first quarter, the economy suffered a sharp contraction of 12.8%.

Value added in industry increased for the second straight quarter, rising 2.9% year-on-year in the second quarter. On the other hand, in construction, output fell 15.3%, but at the slowest pace in six quarters.

Final consumption expenditure declined 5.7% year-on-year in the second quarter. Household consumption expenditure recorded a decline of 7.5%, while government consumption expenditure remained unchanged.

Gross fixed capital formation also dropped 8.6% in the three-month ending June. Meanwhile, exports climbed 21.1% and imports were up 16.5% annually.

Bank of Lithuania expects the economy to expand 0.5% this year and 3.1% next year. Although the economy has reached its turning point, unemployment is expected to decline only slowly, according to the central bank.

Jobless rate is expected to be at 17.9% this year and may drop to 16.4% next year. Latest unemployment data from the statistical office showed that the unemployment rate rose to 18.3% in the June quarter from 18.1% in the first quarter.

Meanwhile, the International Monetary Fund projects a 2.1% expansion for the economy this year. Lithuania is likely to return to growth in 2010, supported by a modest recovery in exports, the lender said. But the IMF observed that country needs more budget cuts to put its debt on a sustainable path.

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