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When the Statistics Department released its first GDP estimate for January-March on Friday, the BNS news agency asked seven economists to provide forecasts of their GDP changes. Most said the recession was less than 1 percent, one expert estimates that GDP fell as much as 3.6 percent, and two experts estimate that the economy could have grown this year as well.
Losses were mitigated by the manufacturing industry.
According to experts, the Lithuanian export sector – the manufacturing industry – played a very important role during the second quarantine, which offset part of the losses in the activities affected by the quarantine and led to better GDP results.
Indrė Genytė-Pikčienė, chief economist at asset management company INVL Asset Management, believes that in January-March this year, GDP declined 0.8 percent compared to the same period last year. According to her, Lithuanian manufacturers have managed to take advantage of the opportunities that are opening up in the world due to logistical interruptions, new niches or shortening of supply chains.
“If at the beginning of the year the performance of the industry was mainly driven by the chemical industry with a breakthrough in the production of reagents, it is especially amusing to see that more and more industries have gained momentum in recent months. The advancement in production it is also supported by rapid production growth in the wood and furniture, vehicle, machinery and equipment, and metal industries. In addition, the second quarantine was also much lighter for the retail sector, “said I. Genytė-Pikčienė to BNS.
The economist of the SEB bank, Tadas Povilauskas, forecasts 0.7 percent. The contraction in GDP indicates that in March, industrial and retail indicators far exceeded expectations, so the bank’s previous forecast of a 2.4% drop in GDP is already too pessimistic.
“The growth of retail revenue at constant prices in the first quarter at 4.9 percent was really surprising, showing that despite the restrictions, the growth of people’s income slowed slightly in the first quarter and the demand for goods did not decline due to lower spending on services, “Povilauskas told BNS.
Swedbank economist Nerijus Mačiulis, who forecast 0.5 percent. The drop in GDP is said to have led to fewer construction works in the first quarter due to the extremely cold and snowy winter, but this is only a temporary disruption. According to him, the future funds of the European Union funds, the high demand for housing promises good this year and next for the construction sector.
“The moment of pessimistic capitulation and rising forecasts is approaching,” said N. Mačiulis.
T. Povilauskas also points out that the first quarter was still weak in the catering, accommodation, travel, art and events sectors, but its impact on the country’s GDP is not significant: industrial growth exceeded the losses in these sectors.
Kotryna Tamoševičienė, Head of the Economics Department of the Bank of Lithuania, did not forecast a change in GDP, but said that although the epidemiological situation is now much more complicated than a year ago, an economic contraction is expected less than during the first wave. of the virus.
“Companies are better prepared and adapted to work in such a changing world, we are seeing rapid growth in online commerce and workplaces are more suitable for telecommuting or safe work in the workplace. The population is also better adapted, the first surprise has passed and people are less restrictive in their consumption due to the pandemic ”, he told BNS.
According to K. Tamoševičienė, data from retail shows that the impact of the second wave on consumption was less, and a rapid rebound was observed when restrictions began to be relaxed. She says that the rapid growth of exports from the chemical industry, especially reagents, in late 2020 should also lead to better results in the first quarter.
Quarantine can slow economic recovery
Sigismund Mauricas, an economist at Luminor Bank, estimates that GDP fell 3.6 percent this year. According to him, although a significant number of sectors show a high degree of resilience to the crisis, continued quarantine restrictions and the widening gap between different sectors may slow down the overall economic recovery.
According to him, in the first quarter, the Lithuanian economy experienced a K-shaped recession, characterized by a growing separation between different activities. According to Ž. Maurico, during the first quarantine, most of the activities experienced a decline, after which they recovered faster or slower. However, now some sectors are not in decline at all, and some are experiencing much higher levels than during the first quarantine.
“For example, during the first quarantine, population mobility decreased significantly both in food, non-food and leisure businesses (also billing), so a V-shaped crisis was observed in both sectors. However, during the second quarantine, mobility increased in food trade companies, and not in food and leisure companies, it decreased more than during the first quarantine ”, points out the economist.
It says that the real estate, industry and transportation sectors suffered less during the second quarantine than the first, while the catering and other leisure sectors suffered more than during the first quarantine.
Expect growth
Financial analyst Marius Dubnikov believes the economy grew 2% this year. According to him, the forecast is extremely optimistic, since consumption jumped at the end of the quarter and very good results were observed due to exports from the biomedical sector, in addition, other export sectors also maintained a high march.
“Export markets are showing strength, and already in the first quarter, hopes began to emerge that a fan in the form of vaccines would also be connected to domestic consumption.” In addition, a year after the start of the pandemic, many companies have moved to cyberspace and not only partially compensated for the loss of sales, but also reached market niches that were previously unreachable, ”said M. Dubnikov.
At the time, Alexander Izgorodin, an economist at SME Finance, said that GDP would fluctuate by 0 or grow by 0.5 percent.
“Is this result worth enjoying? And yes and no. In my opinion, Lithuania was simply lucky: in the first quarter, the two largest sectors of the Lithuanian economy showed surprisingly good results, but largely due to purely technical aspects, ”A. Izgorodinas told BNS.
According to him, in the first quarter, the pandemic generated about half of the production growth in the industry, where volumes increased by 14.3 percent, but according to the economist, if not COVID-19, the growth real industrial would reach only 6.5 percent.
In the first quarter of the economy, compared to the fourth quarter of 2020, most economists did not forecast: in their assessment, quarterly changes are affected by a strong seasonal component, making it difficult to assess them accurately.
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