LITHUANIAN ECONOMIC REVIEW 2012 FEBRUARY 2012 ISSN 2029-8471 (online) Lithuanian Economic Review analyses the developments of the real sector, prices, public finance and credit in Lithuania, as well as the projected development of the domestic economy. The material presented in the Review is the result of statistical data analysis, modelling and expert assessment. The Review is prepared by the Bank of Lithuania. During the preparation of the Lithuanian Economic Review, the data of the Bank of Lithuania, Statistics Lithuania, the European Central Bank, Eurostat, the International Monetary Fund, Bloomberg and other data published up to 30 January 2012 were used. Coordinator of the publication: Mr Mindaugas Leika, Director of Economics Department, phone No.: +370 5 268 0138, e-mail: [email protected] Reprinting is allowed only for education and non-commercial purposes, if the source is indicated. © Lietuvos bankas, 2012 Contents ECONOMIC OUTLOOK ...................................................................................................................................................... 3 I. INTERNATIONAL ENVIRONMENT .................................................................................................................................. 5 II. REAL SECTOR ............................................................................................................................................................... 7 III. LABOUR MARKET ....................................................................................................................................................... 10 IV. EXTERNAL SECTOR .................................................................................................................................................. 12 Current account and its financing ................................................................................................................................. 12 Foreign trade and competitiveness ............................................................................................................................... 13 V. PRICES AND COSTS ................................................................................................................................................... 14 Core inflation ................................................................................................................................................................. 14 Food prices ................................................................................................................................................................... 14 Administered prices ...................................................................................................................................................... 15 Fuel prices .................................................................................................................................................................... 15 VI. CREDIT AND DEPOSITS ............................................................................................................................................ 18 VII. GENERAL GOVERNMENT FINANCE ........................................................................................................................ 20 ANNEX .............................................................................................................................................................................. 22 Introduction to Social Accounting Matrices ................................................................................................................... 22 Boxes Box 1. Effects of AB bankas SNORAS bankruptcy on key economic indicators of Lithuania .............................................. 4 Box 2. Carry-over effect and its impact on the growth of GDP ............................................................................................ 9 Box 3. About the minimum monthly wage .......................................................................................................................... 11 Box 4. An overview of forecasts of global food prices........................................................................................................ 16 List of tables 2 Table 1. Macroeconomic indicators of Estonia and Latvia ........................................................................................................................ 6 List of charts Chart 1. Global purchasing managers’ index (PMI) .................................................................................................................................. 5 Chart 2.Key interest rates of central banks .............................................................................................................................................. 5 Chart 3. World commodity prices ............................................................................................................................................................. 5 Chart 4. Annual change of real GDP, estimated by expenditure approach, in the US............................................................................... 6 Chart 5. Price of five-year credit default swaps in the euro area countries ............................................................................................... 6 Chart 6. Real GDP growth and contributions ........................................................................................................................................... 7 Chart 7. Development of private consumption and retail trade ................................................................................................................. 7 Chart 8. Gross fixed capital formation growth and contributions ............................................................................................................... 7 Chart 9. Contribution of real net exports to annual GDP growth ............................................................................................................... 8 Chart 10. Real GDP growth and contributions ......................................................................................................................................... 8 Chart 11. The number of the employed and the unemployment rate ...................................................................................................... 10 Chart 12. Average gross wage .............................................................................................................................................................. 10 Chart 13. Components of the current account balance .......................................................................................................................... 12 Chart 14. Current transfers to Lithuania ................................................................................................................................................. 12 Chart 15. Current account deficit and its financing ................................................................................................................................. 12 Chart 16. Contributions to exports growth .............................................................................................................................................. 13 Chart 17. Value of exports of goods ....................................................................................................................................................... 13 Chart 18. Contributions to imports growth .............................................................................................................................................. 13 Chart 19. Contributions to annual inflation ............................................................................................................................................. 14 Chart 20. Global food prices .................................................................................................................................................................. 14 Chart 21. Contributions of administered prices to annual inflation .......................................................................................................... 15 Chart 22. Crude oil price and fuel prices in Lithuania ............................................................................................................................. 15 Chart 23. Contribution to changes in banking loan portfolio in January-November ................................................................................. 18 Chart 24. Changes in loan portfolio to corporate sector per quarter ....................................................................................................... 18 Chart 25. Changes in loan portfolio to households per month ................................................................................................................ 18 Chart 26. Contribution to changes in weighted average interest rate on new loans to private sector ...................................................... 19 Chart 27. Contribution to changes in deposits in banking system per month .......................................................................................... 19 Chart 28. General government revenue growth and contributions .......................................................................................................... 20 Chart 29. General government spending growth and contributions