According to the latest outlook from the International Monetary Fund (IMF), economic growth in Lithuania and other countries of the world may turn out slower than previously expected, as reported by Lithuanian public media LRT.
According to forecasts from IMF, Lithuania’s GDP will grow by 1.8% this year and 1.1% in 2023.
Although the forecast for this year remains unchanged when compared to April’s forecast, it was downgraded by one and a half percentage points for 2023.
The slow economic growth is largely due to a drop in consumption, which was negatively affected by residents’ purchasing power, which, in turn, was reduced due do growing inflation. Another important factor is the slower than expected economic growth rate in the biggest Eurozone member states, which resulted in lower demand for Lithuanian exports.
It is expected the annual average inflation in Lithuania will reach 17.6%.
According to IMF’s report, the price rise, which reached its peak in autumn, will go down next year. Average inflation is expected to drop to 8.4%.
Gediminas Šimkus chairman of the Bank of Lithuania said the current economic environment requires fast and coordinated reaction from central banks, governments and international financial institutions.
«With inflation on the rise, driven mainly by the exogenous supply shock caused by Russia’s war on Ukraine and the energy and political blackmail against the rest of the world, it is important that aid measures reach the most vulnerable countries, populations and businesses quickly,» he said.
«This will put pressure on governments to subsidise increased costs, but from a monetary policy perspective, it is important that state aid is as targeted as possible, aimed at only the most vulnerable social groups and economic activities to ensure that price signals and the competitive environment in the economy are not distorted,» added the head of the Lithuanian central bank.
Full article in English is available here: https://www.lrt.lt/en/news-in-english/19/1798979/imf-halves-lithuania-s-2023-growth-forecast