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2013 09 26

SEB ups Lithuania's 2013 GDP growth forecast

SEB Bankas, Lithuania's largest bank by assets, has raised the country's GDP growth forecast for this year to 3.8 percent, from 3.2 percent in June, amid growing optimism in the domestic market, which is seeing a recovery in retail sales and growing demand for non-basic goods.
SEB
SEB / Irmanto Gelūno / BNS nuotr.

SEB Bankas said on Thursday that it was keeping its Lithuanian economic growth forecasts for 2014 and 2015 unchanged, at 3.5 percent and 4 percent, respectively.

The bank lowered its average annual inflation estimate for this year to 1.5 percent, from 2 percent previously.

It expects inflation to accelerate to 2.8 percent next year and to 3.5 percent in 2015.

Unemployment in Lithuania is projected to reach 11.5 percent this year and to ease to 10 percent and 8.5 percent in the next two years, respectively.

Wages should rise by 4 percent this year and go up by another 4.5 percent in 2014 and 7 percent in 2015.

SEB Bankas analysts keep their fiscal deficit forecasts unchanged and expect this year's figure to meet the Maastricht criterion for euro adoption.

"To tell the truth, we are on the razor's edge. We have some reserve and can stay within three percent," Gitanas Nausėda, an adviser to the president of SEB Bankas, said while presenting the bank's latest macroeconomic report.

SEB Bankas is sticking to its fiscal deficit forecasts published in late June, at 2.8 percent in 2013, 2.5 percent in 2014 and 1.5 percent in 2015.

"We expect that when voting on next year's budget plan for the central and local governments, the Seimas will keep to the provisions of the Law on Fiscal Discipline and will not put euro adoption plans in jeopardy," the bank said in the report.

This year's top priority in public finances is to keep the fiscal deficit within 3 percent of GDP, it said.

Formally, it is this year's fiscal deficit that is important for Lithuania to qualify for euro entry in 2015, but the European Commission and the European Central Bank would not be happy to see signs of relaxation in the country in 2014, SEB Bankas said.

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