GDP increases almost 4% in the third quarter, driven by higher consumption and good returns Business

The pulse of the economy after the quarantine returned to normal, analysts say. This was due to high consumption in the summer, a good grain harvest, and flexibility of exporters.

Shoppers returned to stores.

As Indrė Genytė-Pikčienė, INVL’s chief economist, notes, retail has set records. At the end of the quarantine, consumer expectations recovered, as did consumption.

Already in May, retailers rejoiced at the full return of their customers to the stores, and in the summer months and September, their sales volume already broke new records: compared to the corresponding 2019. during the period they were even almost 7%. larger.

The recovery in consumption was mainly due to the population’s still-growing income, says Darius Imbrasas, an economist at the Bank of Lithuania. This was also due to a significant increase in social transfers: pensions, money for children, support for COVID-19.

“As a result, the highest income was spent on the purchase of goods and services,” says the Bank of Lithuania economist.

According to Sodra, the number of employees in the summer months was only about 1 percent. lower than a year ago, and wage growth has returned to pre-pandemic, close to 10 percent. per year – level.

Good summer for agriculture

Agriculture is particularly important for economic growth in the third quarter. The impact of the sector on the economy typically rises to 7-8% in the summer, compared to around 2.3% in subsequent quarters.

“This summer has been as good as ever for the farmers. The largest cereal harvest in five years was obtained and the second largest in the history of Lithuanian agriculture,” notes I.Genytė-Pikčienė.

This year’s result is lower only in 2015. record yields. Therefore, this jump contributes significantly to the overall positive economic growth in the third quarter.

The activity of the Lithuanian economy should have accelerated significantly thanks to the better cereal harvest than a year ago. This year, according to preliminary estimates from the Department of Statistics, the grain yield should be 15 percent. higher than last year.

However, a recovery has also been observed in other sectors. Compared to other EU countries, the Lithuanian economy has recovered quickly due to relatively small quarantine losses to the economy.

Victims generate low GDP

The tourism, accommodation, travel, entertainment and cultural services, health and catering sectors at the peak of COVID-19 in Lithuania account for a relatively smaller share of GDP than in the worst affected EU member states, analysts say.

Meanwhile, industrial, construction and transport activities, which play a very important role in the Lithuanian economy, are more inert and more resistant to quarantine, notes the INVL economist.

Exporters have proven to be flexible

LLithuania’s manufacturing production volumes (excluding mineral fuel production) in July-September averaged 3.2%. higher than in the corresponding period last year.

Lithuania’s exports of manufactured goods (excluding petroleum products) also returned to last year’s level in the summer.

Individual feedback from large trucking companies gives the impression that the providers of these services have also been able to seize opportunities and regain balance. These results show that crisis-affected Lithuanian exporters can adapt quickly to adverse circumstances and grow even when markets fall, ”says the INVL economist.

The fourth quarter will be sadder

The terrifying statistics of infections are forcing politicians to return to reality and take increasingly strict measures to manage the situation on the health front. Observing the behavior of other countries does not rule out the possibility of a total quarantine. This will undoubtedly affect the economic results in the last quarter of this year, says the INVL economist.

According to her, it is comforting that, unlike spring, there is no more frigid panic, the first quarantine has hardened, we have tamed the virus and we are calmer with the situation.

According to the Bank of Lithuania, the deterioration of the epidemiological situation changed the mood in February. “At the same time, there is a growing risk that economic development will be worse in the last quarter,” notes the Bank of Lithuania.