Lithuania’s GDP plummets 22.4%

Wow. It’s astounding that a country’s economy can fall by nearly one-fourth.

Lithuania’s economy shrank 22.4 percent in the second quarter compared to the same period a year ago, the biggest drop since the Baltic country broke away from the Soviet Union in the early 1990s, officials said Tuesday.
The preliminary figures from Statistics Lithuania were worse than expected, and raised concerns that neighboring Latvia and Estonia may also post steeper-than-expected declines in the second quarter.
The Baltic countries enjoyed strong growth after joining the EU in 2004 but their economies stalled as a property bubble burst and gross domestic product started falling last year amid the global credit crunch.
In the first quarter, EU statistics showed Latvia, Estonia and Lithuania had the worst performing economies in the 27-member bloc, with annual drops in output of 18.6 percent, 15.6 percent and 10.9 percent, respectively.
Danske Bank analyst Lars Christensen said Lithuania’s worse-than-expected figures for the second quarter calls into question whether the EU’s euro3.1 billion bailout package for Latvia was based on “too optimistic” economic forecasts.
The deal relies on an estimate that Latvia’s gross domestic product will drop by 18 percent this year, but Christensen said he expected GDP to fall “no less than 20 percent.”
Unlike Latvia, Lithuania has not requested help from international lenders.
“The GDP fall is just catastrophic, but we were not expecting anything else,” said Gitanas Nauseda, analyst at SEB bank in Vilnius. He said the annual drop is expected to be smaller in the second half of the year.

Posted by on July 28th, 2009 at 9:12 am


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