According to preliminary estimates, Lithuania’s GDP growth in Q4 2019 stood at 3.8% on an annual basis. The Lithuanian economy was powered by investments and favorable labor market. Increased investments a few years back have brought about a significant increase in production capacity which, in turn, has contributed to growth of industry and exports.
In December 2019 the unemployment rate in Lithuania stood at 8.7%, down by 0.2 p.p. compared to December 2018. To a slight extent, a higher immigration rate eased tensions on the labor market. The majority of immigrants have been hired by transportation companies, whereas a number of other industries continue to struggle with a shortage of personnel.
In 2019, inflation subsided to the annual rate of 2.7%. This increase largely reflected the higher prices of transport, recreation and culture as well as municipal services which more than offset the lower prices of clothes and shoes. In addition, food and soft drink prices dropped slightly in December.
In the third quarter of 2019, Latvia’s GDP grew at a rate of 1.9% (annual data, seasonally adjusted). Domestic demand became increasingly the main motor of GDP growth, but its rate significantly slowed down compared to the year before. The deterioration of the business climate was attributable to higher uncertainty in the external market environment. Investments and private consumption dropped, which confirms the increasing caution both among investors and general public.
In Q3 2019, the unemployment rate slightly dropped to 6.0%. The second quarter in a row the number of employees also dropped in annual terms, which may reflect an economic slowdown.
In December 2019, the annual inflation rate was 2.3%, driven largely by higher prices of food, soft drinks and goods and services related to home maintenance (commodity prices increased 2.1% and service prices grew by 2.6%).
Based on data published by the Bank of Estonia1, the country’s GDP increased 4.2% in Q3 2019 (on a year-on-year basis), whereas the quarter-on-quarter increase was 1.0%. GDP in Q3 was based mainly on seasonal factors, i.e. one-off increase of excise tax proceeds and record-breaking crops. Faster growth in the agriculture sector had positive impact on exports as the production volumes in the processing industry (the main export sector) remained on the same level as the year before.
Unemployment remained low in Q3 2019. The unemployment rate reached 3.9%. The average wages remained high, recording an increase by 8.2% in Q3 2019.
The consumer price index (CPI) moved up 2.3% in 20191 compared to the year before. Inflation in 20192 slowed down, driven mainly by energy prices, which increased quickly at the beginning of the year to start to decline from October. Inflation in the foodstuffs basket grew at a slower pace, mainly due to a reduced excise rate for alcohol.
After years of political and economic tensions, in 2019, the Ukrainian economy was showing signs of stabilization. In Q3, Ukraine’s annual GDP increased 4.1% compared to the corresponding period of the previous year. In December 2019, the annual inflation rate was 4.1%, the lowest in the last 5 years. The inflation pressure was eased down by the strengthening of the hryvnia, reduction of energy prices and increasing of the offering by certain foodstuffs.
After 11 months of 2019, a negative balance of foreign trade in goods and services was recorded (USD – 10.9 million) caused mainly by the unresolved conflict in eastern Ukraine. The loss of control over the resources in the East curtailed Ukraine’s export capacity (due to disruptions in mining production and electricity generation).
1 Estonian Economy and Monetary Policy, 4/2019, Bank of Estonia
2 Data published by the Estonian Statistical Office