Sep 30, 2009
Baltic economy update, retail sales, industrial production
Lithuania will sell euro- denominated bonds in less than a month in a second auction this year. The government targets reducing the budget deficit next year and will cut spending and raise taxes by a total of 4.2 billion litai to narrow the gap, Kubilius said today.
4.2bn litas is ~11% of 2008 government revenue or 3.7% of 2008 GDP. If government expenditure multiplier is 1 than GDP of the country will contract 3.7% only from lower public spending. In fact, the decline can be as much as 7% or 10%, as more money is saved in recession than it is spend. And this excludes firms and households consumption.
Industrial production in Baltics is in double digits deficit. All the latest readings show the smallest contraction this year. In Lithuania the figure is -13.2%, in Estonia – -27%. Previous months downward revisions create the visual effect of falling rate of deterioration and month-on-month improvements.
Baltic industrial production
Retail sales in Estonia and Latvia declined to all time lows in August: -17.9% and -30.3% respectively. In Lithuania the decline was 19.6% excluding autos, the same as in July, and worse than 19.2% in June.
Baltic retail sales
Total number of unemployed people rose to 431,000. This compares to 7.2mn inhabitants of the three Baltic states.
Baltic unemployment
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