Lithuanian Outlook Hurt by Uncertainty, Central Bank Says

Lithuania’s economy will probably grow at a slower pace than previously estimated next year as economic and political uncertainty reduce consumption and investment, the central bank said.

Gross domestic product will expand 3.1 percent, down from an August estimate of 3.4 percent, Lietuvos Bankas, based in the capital, Vilnius, forecast today in an e-mailed statement. It kept this year’s 3 percent growth estimate unchanged.

The Baltic nation is awaiting the formation of a new government after last month’s parliamentary elections were won by parties pledging to boost the minimum wage and review the tax system. GDP growth has slowed from the European Union’s second- fastest pace of 5.9 percent last year as the continent’s debt crisis damps demand for Lithuania’s products.

“Uncertainty about the future is restraining consumption and forcing companies to delay expansion decisions,” the central bank said.

The central bank also raised its inflation-rate forecasts for this year and next, to 3.2 percent and 2.8 percent, from August estimates of 2.9 percent in 2012 and 2.4 percent in 2013.

The revision reflected faster-than-expected growth of prices for food, fuels and industrial goods, it said.

Consumer-price growth decelerated to 3.1 percent in October, the slowest since July.

To contact the reporter on this story: Bryan Bradley in Vilnius at bbradley13@bloomberg.net

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

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