Analytics, Economics, Financial Services, GDP, Lithuania

The 2020 projection is unchanged from the previous one, but the 2021 growth forecast is down from 3.1% previously.  

Under a "mild" scenario that assumes that the pandemic situation is handled successfully and stabilizes in the near future, Lithuania's GDP is expected to decline by 1.4% in 2020 before recovering by 4.5% in 2021, the central bank said in a report.

In a "severe" scenario that implies that the coronavirus containment measures remain in place for a longer period of time, the country's GDP is projected to contract by 2.7% this year and by another 3.3% in 2021.

The Bank of Lithuania forecasts that headline inflation will ease to 1.1% this year and will stay at this level next year. It expects wages to grow twice as fast as prices, by 2.2%, in 2021. 

Lithuania's budget deficit is projected to widen to almost 9% of GDP this year, one of the highest in the EU, and to exceed 5% next year. 

The state debt, at a record high level this year, is forecast to grow further to over 50% of GDP next year.