When evaluated by the production method, in 2024 in the first quarter, the results of manufacturing, wholesale and retail trade, and transport and storage companies had the greatest positive influence on the GDP change.
in 2024 first quarter real GDP change compared to the corresponding 2023 in the quarter, without removing the influence of the season and the number of working days, it was positive and amounted to 2.9 percent, after removing the influence of the season and the number of working days, it was 2.9 percent.
The change in real GDP in the first quarter of this year compared to 2023. in the fourth quarter, without removing the influence of the season and the number of working days, it was negative and amounted to -7.7 percent.
Economist: In the future, there will be much more favorable impulses for the economy
Indrė Genytė-Pikčienė, the Chief Economist of Šiaulių bankas, comments that the most positive influence on the GDP change was the results of manufacturing, domestic trade and transport and logistics companies. An important factor for the annual growth indicator is the very poor GDP result of the first quarter of last year, so the annual change in numerical terms looks relatively strong. According to the economist, we will see a more significant breakthrough in recovery in the second half of the year, because for the time being, the environment of high interest rates is still unfavorable for economic growth. Its narrowed freedom of financial maneuver of companies and households affects expectations, consumption and investment plans, external demand, cyclically sensitive sectors and the behavior of economic participants themselves.
“Out of all development factors, at the beginning of this year, the Lithuanian economy continued to rely more firmly on the column of growing investments, but domestic consumption is already starting to recover, and export results still remained weak. The growth of investments is mainly determined by the development of engineering structures financed by EU structural funds – public investments in roads, viaducts and other engineering structures and energy infrastructure. For these reasons, the volume of engineering construction works continues to grow at a surprising double-digit rate.
In general, the growth of public investment in such circumstances works countercyclically and compensates for the more modest results of the development of activities more sensitive to business cycle fluctuations. Public investment continued to successfully recruit the already cyclical construction sector. This is shown by the extremely rapid annual growth of the volume of construction works of engineering structures.
Industries that were hit hard last year are showing more and more positive impulses. Positive results of industrial production are already being shown by the energy-intensive chemical industry, which experienced a painful year last year. Warehouses are being renewed and the furniture and wood industry is preparing for a new growth cycle. Little by little, the expectations of producers are improving, the demand for labor force is recovering, preparations are being made, stocks are being formed, for the recovery of export market demand.
Meanwhile, food and accommodation activities and other services serving domestic consumption are facing the test straight and recorded negative results in the first quarter. This is also shown by the evaluations of the sentiments of the service sector – the expectations indicators of these activities have not yet recovered from the bottom.
As inflation subsided and faster than expected wage growth is already being observed this year, the consumption appetite of Lithuanian households will be strengthened. This will allow domestic demand-fed activities to recover as well. The first swallows of recovering consumption can be called the good data of retail trade turnover in March. Both due to the convenient comparative base of last year and the aforementioned reasons of wage growth that revived purchasing power and exhausted inflation, the volume of domestic trade jumped by 5.6 percent, and the turnover of companies selling food and other goods grew at similar rates.
In the second half of the year, it is likely that there will be much more favorable external impulses. Cutting interest rates, improving expectations of consumers and companies and recovering demand will inject energy into the faster recovery of outward-oriented sectors”, comments I. Genytė-Pikčienė.
