Look for:

Research Detail

2019/04/01 / Erste Group Research

Lithuania Macro Outlook: where does the Baltics giant go?


Economy is expected to slow down to 2.7% in 2019. Despite robust wage growth, inflation remained under control. Budget balance will most likely maintain surplus. Bond supply will be limited in coming months.

After contracting by almost 15% in 2009, in the aftermath of the financial crisis, the economy reached its pre-crisis level already in 2014. Over the last five years, it has expanded on average by 3.1%. Growth dynamics in Lithuania peaked in 2017, when the economy grew 4.1% y/y, supported by the visible rebound of investments and strong private consumption.

Similarly to other Baltic countries, the labor market in Lithuania has been flourishing over the last few years. Employment and unemployment rates have improved visibly since 2015. In 2018, monthly nominal wages increased by almost 10% y/y from roughly EUR 890 to EUR 970.

Since 2016, Lithuania has been maintaining its budget in a surplus. According to preliminary data from the Ministry of Finance, the budget balance stood at 0.6% of GDP in 2018. Public debt went down in 2018 to 34.8% of GDP, but it is projected to go temporary up to almost 38% of GDP in 2019. The figure is highly affected by the planned pre-financing of EUR 1.3bn of a Eurobond redemption that is due in February 2020.

The Lithuanian bond market is the biggest in the Baltic region and is worth EUR 13.6bn. Almost 70% of bonds are denominated in EUR, the rest in USD. Although this year’s financing needs have already been 45% covered, February 2020 redemptions of EUR 1.3bn will surely require additional bond supply this year.

PDF Download Download PDF (354kB)

General information

AuthorErste Group Research
Date2019/04/01
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focus-
Currency in focus-
Sector in focus-
DownloadPDF (354kB) PDF Download



Accept

We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended), citizen/resident of Australia, Canada, Great Britain and Japan. For this reason, the distribution or redistribution of the information, materials and products into United States, Australia, Canada, Great Britain and Japan or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited.

The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.