Lithuania Central Bank Raises Economic-Growth Forecast Again

Lithuanian economic growth may accelerate at a faster pace than previously estimated on rising demand abroad for the country’s goods, the central bank said.

Gross domestic product will probably expand 5.6 percent this year, compared with a February estimate of 3.3 percent, Vilnius-based Lietuvos Bankas said today in an e-mailed statement. The bank raised its 2012 growth forecast to 4.8 percent from 4.1 percent. It’s the second time this year the bank boosted its outlook.

Lithuania’s economy, part of the Baltic region along with Estonia and Latvia that suffered the world’s deepest recession in 2009, is benefiting from rising demand for its exports, which account for about two-thirds of output. GDP growth accelerated to 6.9 percent in the first quarter, the fastest pace in three years.

“The development of macroeconomic indicators shows the strengthening of the economic recovery in Lithuania,” the bank said. “In addition to rising activity in the main foreign trade partners, a recovery of domestic demand is starting to exert favorable influence on the economy.”

The yield on Lithuania’s 10-year bond fell 0.01 percentage point to 5.4 percent today after the release of the forecasts, the lowest since it was sold March 2 at 6.125 percent.

The central bank raised its inflation forecast for this year to 3.8 percent from 2.8 percent on food and fuel prices. Consumer prices may rise 3.9 percent in 2012, it said.

“Pressure on prices has not been observed yet” because of rising demand, the central bank said. “However, it may emerge when economic recovery matures.”

The Finance Ministry raised on March 16 its economic growth forecast for 2011 to 5.8 percent from a previous estimate of 2.8 percent.

Lithuania had the outlook on its credit rating increased to positive from stable by Fitch Ratings yesterday as the economy recovers and public finances strengthen.

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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