Lithuania: Investment and exports to support solid growth in 2018

Rebounding investment boosts growth

Real GDP growth accelerated from +2.3% in full-year 2016 to +4.1% y/y in H1 2017, mainly thanks to a strong rebound in fixed capital formation. In Q3 2017, growth eased to +3.1% y/y as, despite rapid wage gains, rising inflation and declining employ-ment contributed to a slowdown of consumer spending. This took the average GDP growth in the first three quarters of 2017 to +3.8% y/y. Fixed capital formation rose by +6.6% y/y in Q1-Q3, driven by private investment, but inventories subtracted -0.4pp from growth. Consumer spending increased by +4% and public spending by +1.5%. External trade activity has exceeded expectations in 2017 to date, benefiting from favorable trends in global trade. Both exports and imports rose by +12.2% y/y, so that net exports made a small contribution of +0.1pp to Q1-Q3 growth. ​