Boston, MA -- (SBWIRE) -- 05/28/2014 -- Recent growing geopolitical tensions between Russia and the West over Ukraine will darken investor sentiment in 2014, weighing on Lithuania's trade flows and domestic demand. We expect goods exports to expand by 6.5% in 2014, down from 7.0% growth in 2013.

Lithuania's fiscal consolidation prospects remain in place with the budget deficit to narrow to 2.9% of GDP in 2014 and to 2.6% in 2015 from an estimated 3.3% in 2013. Despite the growing external public debts in recent years, the government's debt dynamics remain on a stable footing due to the government's fiscal consolidation efforts and the upcoming euro adoption which will bolster investor confidence and anchor borrowing costs.

View Full Report Details and Table of Contents

Real GDP growth in Lithuania will arrive at 3.3% in 2014 equal to the outturn for 2013, before slowing to 3.1% in 2015. We expect fixed investment to slow to 5.0% in 2014, and to 4.0% in 2015, down from 12.8% in 2013, as regional geopolitical tensions weigh on investor sentiment.

Major Forecast Changes

We have revised slightly our forecasts for Lithuania's budget deficit for 2014 to 2.9% of GDP from 2.4% previously as the government has pledged to ramp up military spending to 2.0% of GDP from the current 0.9% level. Nevertheless, we maintain that this will not jeopardise Lithuania's prospects of joining the eurozone by 2015.

Key Risks To Outlook

Still-depressed business investment into traditional sectors of the economy, such as construction, do not bode well for a continuation of the ongoing trend in GFCF growth. Indeed, recent years have shown that this expenditure component of GDP has been volatile, and we cannot rule out an erratic recovery in fixed investment going forward.

The recent push into surplus for the current account in 2013 could become a more permanent feature of a still-weak domestic economy and a stabilising external consumption picture. However, Lithuania's improving domestic demand picture means that import growth will move in tandem with export growth, precluding the probability for current account surpluses from 2014 onwards, which remains our core scenario.

About Fast Market Research
Fast Market Research is a leading distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff is always available to help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.

Browse all Country Reports research reports at Fast Market Research

You may also be interested in these related reports:

- Oman and Yemen Business Forecast Report Q3 2014
- Kuwait Business Forecast Report Q3 2014
- Serbia, Montenegro and Kosovo Business Forecast Report Q3 2014
- Brazil Business Forecast Report Q3 2014
- Chile Business Forecast Report Q3 2014
- Hong Kong Business Forecast Report Q3 2014
- Hungary Business Forecast Report Q3 2014
- Philippines Business Forecast Report Q3 2014
- Botswana Business Forecast Report Q3 2014
- Pakistan Business Forecast Report Q3 2014