VILNIUS — Due to ever-weak domestic demand and the Greek economic meltdown, the Bank of Lithuania has revised its growth figures for 2011 down to 3.1 percent.

New figures show that Lithuania’s economy has just bottomed out and most analysts are either predicting small contractions or growth in the economy for the rest of this year and growth next year. The crisis has crippled most budgets in the country, causing individual purchasing power to [private_supervisor]decline 8.4 percent on average.

The central bank’s original prediction of 3.4 percent growth was moderated down slightly due to tensions arising from the Greek debt crisis.

“Economic activity might be more subdued due to lower than expected private consumption and tensions in financial markets related to the stance of public finances in Greece and some other countries,” the bank said on Thursday in a release.

The central bank is more optimistic for 2010 than most of the private banks predicting a 0.5 percent growth in gross domestic product.

The Finance Ministry said the government was looking for an export-driven recovery as external demand firms up. Finance minister Ingrida Simonytė said that western markets could return to their pre-crisis states by the end of the year.

The private banks predict growth for 2011, but are a mixed bag for the remainder of this year. SEB is predicting around 1 percent growth, Swedbank is predicting a contraction of between 0 to -2 percent and Danske Bank is predicting a -2.2 percent contraction of GDP.

In a press release in February, the finance ministry said it expects the economy to grow by 1.6 percent in 2010.

Lithuania suffered heavily in 2009 with the economy saw a 15 percent contraction year on year.

Loans to government look likely

While the economy seems like it will be more bullish from now on, the finance ministry has declared its intention to borrow billions of litai to fund the government’s activities before the end of the year.

“We definitely will have to borrow several billion litai, but it is both the need for refinancing as well as for working capital needs. This is not a needed to finance the deficit,” Finance Minister Ingrida Šimonytė said on Thursday.

Despite the need to borrow, she said that everyone is expecting the economy to get better from now on in.

“All forecasts remain more or less in one direction, the differences are not great and certainly not to do something very far-reaching conclusions. Just assumptions about how much exports will recover this year or how much we can increase the fixed-capital formation for absorption of EU funding, is somewhat different,” Šimonytė said. “The Commission estimates there may be more pessimistic than ours, but the Commission itself in its description clearly states that there is considerable likelihood that the situation will be better.”

During the press conference Šimonytė went on to say that Lithuania would have been in the same state is Greece is now if the government had not acted with harsh austerity measures last year.

The government put up taxes and cut public sector wages across the board in an effort to reign in a huge budget deficit and shrinking incomes. [/private_supervisor] [private_subscription 1 month]decline 8.4 percent on average.

The central bank’s original prediction of 3.4 percent growth was moderated down slightly due to tensions arising from the Greek debt crisis.

“Economic activity might be more subdued due to lower than expected private consumption and tensions in financial markets related to the stance of public finances in Greece and some other countries,” the bank said on Thursday in a release.

The central bank is more optimistic for 2010 than most of the private banks predicting a 0.5 percent growth in gross domestic product.

The Finance Ministry said the government was looking for an export-driven recovery as external demand firms up. Finance minister Ingrida Simonytė said that western markets could return to their pre-crisis states by the end of the year.

The private banks predict growth for 2011, but are a mixed bag for the remainder of this year. SEB is predicting around 1 percent growth, Swedbank is predicting a contraction of between 0 to -2 percent and Danske Bank is predicting a -2.2 percent contraction of GDP.

In a press release in February, the finance ministry said it expects the economy to grow by 1.6 percent in 2010.

Lithuania suffered heavily in 2009 with the economy saw a 15 percent contraction year on year.

Loans to government look likely

While the economy seems like it will be more bullish from now on, the finance ministry has declared its intention to borrow billions of litai to fund the government’s activities before the end of the year.

“We definitely will have to borrow several billion litai, but it is both the need for refinancing as well as for working capital needs. This is not a needed to finance the deficit,” Finance Minister Ingrida Šimonytė said on Thursday.

Despite the need to borrow, she said that everyone is expecting the economy to get better from now on in.

“All forecasts remain more or less in one direction, the differences are not great and certainly not to do something very far-reaching conclusions. Just assumptions about how much exports will recover this year or how much we can increase the fixed-capital formation for absorption of EU funding, is somewhat different,” Šimonytė said. “The Commission estimates there may be more pessimistic than ours, but the Commission itself in its description clearly states that there is considerable likelihood that the situation will be better.”

During the press conference Šimonytė went on to say that Lithuania would have been in the same state is Greece is now if the government had not acted with harsh austerity measures last year.

The government put up taxes and cut public sector wages across the board in an effort to reign in a huge budget deficit and shrinking incomes. [/private_subscription 1 month] [private_subscription 4 months]decline 8.4 percent on average.

The central bank’s original prediction of 3.4 percent growth was moderated down slightly due to tensions arising from the Greek debt crisis.

“Economic activity might be more subdued due to lower than expected private consumption and tensions in financial markets related to the stance of public finances in Greece and some other countries,” the bank said on Thursday in a release.

The central bank is more optimistic for 2010 than most of the private banks predicting a 0.5 percent growth in gross domestic product.

The Finance Ministry said the government was looking for an export-driven recovery as external demand firms up. Finance minister Ingrida Simonytė said that western markets could return to their pre-crisis states by the end of the year.

The private banks predict growth for 2011, but are a mixed bag for the remainder of this year. SEB is predicting around 1 percent growth, Swedbank is predicting a contraction of between 0 to -2 percent and Danske Bank is predicting a -2.2 percent contraction of GDP.

In a press release in February, the finance ministry said it expects the economy to grow by 1.6 percent in 2010.

Lithuania suffered heavily in 2009 with the economy saw a 15 percent contraction year on year.

Loans to government look likely

While the economy seems like it will be more bullish from now on, the finance ministry has declared its intention to borrow billions of litai to fund the government’s activities before the end of the year.

“We definitely will have to borrow several billion litai, but it is both the need for refinancing as well as for working capital needs. This is not a needed to finance the deficit,” Finance Minister Ingrida Šimonytė said on Thursday.

Despite the need to borrow, she said that everyone is expecting the economy to get better from now on in.

“All forecasts remain more or less in one direction, the differences are not great and certainly not to do something very far-reaching conclusions. Just assumptions about how much exports will recover this year or how much we can increase the fixed-capital formation for absorption of EU funding, is somewhat different,” Šimonytė said. “The Commission estimates there may be more pessimistic than ours, but the Commission itself in its description clearly states that there is considerable likelihood that the situation will be better.”

During the press conference Šimonytė went on to say that Lithuania would have been in the same state is Greece is now if the government had not acted with harsh austerity measures last year.

The government put up taxes and cut public sector wages across the board in an effort to reign in a huge budget deficit and shrinking incomes. [/private_subscription 4 months] [private_subscription 1 year]decline 8.4 percent on average.

The central bank’s original prediction of 3.4 percent growth was moderated down slightly due to tensions arising from the Greek debt crisis.

“Economic activity might be more subdued due to lower than expected private consumption and tensions in financial markets related to the stance of public finances in Greece and some other countries,” the bank said on Thursday in a release.

The central bank is more optimistic for 2010 than most of the private banks predicting a 0.5 percent growth in gross domestic product.

The Finance Ministry said the government was looking for an export-driven recovery as external demand firms up. Finance minister Ingrida Simonytė said that western markets could return to their pre-crisis states by the end of the year.

The private banks predict growth for 2011, but are a mixed bag for the remainder of this year. SEB is predicting around 1 percent growth, Swedbank is predicting a contraction of between 0 to -2 percent and Danske Bank is predicting a -2.2 percent contraction of GDP.

In a press release in February, the finance ministry said it expects the economy to grow by 1.6 percent in 2010.

Lithuania suffered heavily in 2009 with the economy saw a 15 percent contraction year on year.

Loans to government look likely

While the economy seems like it will be more bullish from now on, the finance ministry has declared its intention to borrow billions of litai to fund the government’s activities before the end of the year.

“We definitely will have to borrow several billion litai, but it is both the need for refinancing as well as for working capital needs. This is not a needed to finance the deficit,” Finance Minister Ingrida Šimonytė said on Thursday.

Despite the need to borrow, she said that everyone is expecting the economy to get better from now on in.

“All forecasts remain more or less in one direction, the differences are not great and certainly not to do something very far-reaching conclusions. Just assumptions about how much exports will recover this year or how much we can increase the fixed-capital formation for absorption of EU funding, is somewhat different,” Šimonytė said. “The Commission estimates there may be more pessimistic than ours, but the Commission itself in its description clearly states that there is considerable likelihood that the situation will be better.”

During the press conference Šimonytė went on to say that Lithuania would have been in the same state is Greece is now if the government had not acted with harsh austerity measures last year.

The government put up taxes and cut public sector wages across the board in an effort to reign in a huge budget deficit and shrinking incomes. [/private_subscription 1 year]

— This is a paid article. To subscribe or extend your subscription, click here.