Lithuanian economy posts growth after contraction (Roundup)

Jul 28, 2010, 13:22 GMT

Vilnius - The Lithuanian economy returned to growth in the second quarter of 2010 after six successive quarters of contraction, according to preliminary data released Wednesday.

Estimated gross domestic product (GDP) was 24 billion litas (9 billion dollars) at current prices, Statistics Lithuania said. Compared to the second quarter of 2009, it increased 1.1 per cent.

Compared to the first quarter of 2009, growth was even stronger, at 6.6 per cent.

The Lithuanian economy contracted by 15 per cent in 2009, the second-biggest fall in the European Union after neighbouring Latvia.

Finance Minister Ingrida Simonyte told the German Press Agency dpa the figures showed Lithuania was 'absolutely' exiting its recession, led by strong exports.

Simonyte said the ministry was sticking with its prediction of 1.6-per-cent growth in GDP this year but added that the figure might be revised upwards in September when its next forecast is due.

Analysts welcomed the figures but said they should be treated with a degree of caution.

'The recovery in Lithuania is gaining momentum,' said Violeta Klyviene, Baltic economist with Danske Bank. 'It looks like we should revise our fairly conservative forecast for this year to a more positive outcome - the final result may be positive growth of around 1 per cent.'

She added that tight credit conditions would constrain spending and that 'consumption will probably remain negative.'

That view was given some credence by another set of data released Wednesday. Official figures showed that turnover in retail trade fell by 0.5 percent in June after growth of 0.8 per cent in May.