"Lithuania Business Forecast Report Q1 2013" Published

New Country Reports market report from Business Monitor International: "Lithuania Business Forecast Report Q1 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 02 February 2013

Falling borrowing costs and accelerating economic growth have permitted Lithuania's government to assume a higher debt burden, without jeopardising the country's eurozone ambitions. Although we believe that there is room for looser fiscal policy without undermining Lithuania's chances of euro adoption, a more populist government could trigger a strong response from bond holders, which would require policymakers to choose between further EU convergence or populist policies.

Controversy surrounding an ongoing criminal investigation into key members of a majority coalition party means that the administration of Prime Minister-designate Algirdas Butkevicius will be under enormous pressure to acquire political credibility by honouring its anti-austerity mandate. Although we have long believed that Lithuania will continue to progress towards euro adoption, the risk of major coalition instability and a rift with the president's office threatens to force the government into a far more aggressive policy direction than under our current baseline scenario.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/529249_lithuania_business_forecast_report_q1_2013.aspx?afid=201) (http://www.fastmr.com/prod/529249_lithuania_business_forecast_report_q1_2013.aspx?afid=201)

We have revised up our growth outlook for 2013 economic growth on account of improved financing conditions and signs of a tightening labour market. However, Lithuania's construction sector remains a long way off from a meaningful recovery; coupled with a weak external climate, we maintain our view that the economy will be tepid over our forecast period.

Major Forecast Changes

We have raised our 2012 real GDP growth estimate from 2.3% to 3.3%. We have also revised up our 2013 growth outlook, with the country's economy anticipated to expand by 2.1% over the year, up from our previous forecast of 1.4%.

We have revised down our 2012 fiscal deficit estimate from 4.7% of GDP to 4.4%, and see the fiscal shortfall narrowing further to 3.8% of GDP in 2013.

Key Risks To Outlook

We believe that tail risks to our constructive fiscal outlook (with the nominal deficit set to reach 2.8% of GDP in 2014) have increased due to a three-week long stand-off between the coalition parties and Lithuania's president, Dalia Grybauskaite. Grybauskaite objected to the inclusion of the Labour Party into a governing coalition, and could still threaten to veto the inauguration of the government if Labour Party officials are seen to be obstructing the ongoing investigation.

Fast Market Research (http://www.fastmr.com?afid=201) is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.