„We assume that the Lithuanian economy will grow at a slower pace in the third and fourth quarters, with GDP expanding by around 0.5% per quarter, slower than in the first and second quarters, when the economy was growing 0.9% each. The slower quarterly GDP change will be driven by slightly slower growth in exports and household consumption. However, the third quarter will benefit from a 5-10% increase in Lithuania’s grain and oilseed rape harvest from the year before,“ the economist told a press conference in Vilnius on Tuesday.
However, the SEB bank lowered its forecast for the 2025 growth to 2.8% from 2.6%as the economy in the euro area is expected to slow down.
„For 2026, we project a 2.9% real GDP change in Lithuania,“ Povilauskas said.
The SEB bank forecasts inflation will be 1.2% this year, before rising to 3% in 2025. According to the bank, annual inflation bottomed out in the spring, and is expected to pick up gradually in the coming months, reaching above 2% in December.
„Services will go up in price at a slightly lower rate than this year. We forecast an average increase of 1.5% in food prices in 2025 after this year’s decline,“ he said.
Unemployment is forecast to increase this year to 7.3% from earlier projected 7%. It should fall again 7% in 2025.
According to the SEB bank, average salary growth is expected at 9.4% for 2024 and at 8.1% in 2025.
„It is now almost certain that the minimum monthly wage will increase by 12% next year, which will be one of the important factors preventing a further slowdown in wage growth. (&) The government is also likely to be generous again before the elections,“ Povilauskas explained.
SEB forecasts that the European Central Bank (ECB) will cut interest rates twice more this year and five times next year. The GDP of euro area is also expected to grow by 0.8% in 2024 and 1.6% in 2025. Average annual inflation in the euro area is forecast to be 2.5% this year, before dropping to 1.8% next year.