During 2010 the Lithuanian economy will recover much faster than forecasted by the majority of national and foreign analysts, and the long-term savings market will grow together with the recovering national economy.
During 2010 the Lithuanian economy will recover much faster than forecasted by the majority of national and foreign analysts, and the long-term savings market will grow together with the recovering national economy. These trends have been disclosed by experts from the life insurance and pension company Aviva Lithuania.
Exports recovering
According to experts at Aviva Lithuania, one of the main signs of economy recovery is the growth of national exports, the extent of which, from July 2008 to April 2009, had shrunk to the record level of -43%. However, from April 2009 to October of the same year, exports consistently grew up to +23% and reached the level of the year 2007.
"The value of exported goods of Lithuanian origin is 40% of the total national GDP, so the main engine for GDP growth is the manufacturing of produce for export. By evaluating the growth potential for 2010 of the economies of the main countries to which the exports are oriented, namely Russia, Germany and Poland, we forecast that national exports will grow by 17% and this will determine GDP growth,'' says Arunas Rumskas, financial director at Aviva Lithuania.
State revenue increasing
According to experts at Aviva Lithuania, the manufacturing of produce for export helps to maintain jobs and salaries as well as stimulating the growth of internal demand. The strength of the national economy is indicated by the increasing payments to Sodra which grew by 10% comparing the first three quarters of the years 2008 and 2009.
The collection of one of the main taxes, value-added tax (VAT), was also successful – it comprises 29% of the total state budget and indicates domestic market stability. Over 11 months of 2009, the state VAT revenue was 5.4 billion litas, ie 0.4 million litas more than had been planned.
"Increasing payments to Sodra and stable collection of VAT are evidence of vitality of economic activity," says Arunas Rumskas, financial director at Aviva Lithuania.
Growth of GDP forecasted
Taking into consideration the growth in exports which stimulates domestic economic development, Aviva Lithuania experts forecast that GDP will decrease only to -11% at the end of the year 2009, while in 2010 a noticeable recovery of GDP up to +8% is anticipated.
"The present economic situation can be compared to a patient with severe fever whose temperature is dropping and it is likely that the patient will continue to recover. Furthermore, compared to the biggest Western countries, the Lithuanian economy is relatively small meaning that its reaction to crises is prompt. However, as soon as the situation improves to some extent, its reaction is also equally prompt; the Lithuanian economy is much more flexible so it can adapt to various circumstances compared to the world’s major economies," explains Roman Piotr Sosnowski, chief investment manager for Aviva Lithuania.
Conditions for investors improving
This year Aviva Lithuania investors envisage new opportunities in the investment markets of Western Europe, as well as of Asia and the USA.
"This year is the beginning of a long-term upturn. Although we are not going to avoid some risk factors which may have a negative impact on stock markets in the first part of the year, this situation will limit a sudden formation of 'bubbles' and will have a positive impact on the sustainability of the growth cycle," says Roman Piotr Sosnowski, chief investment manager, Aviva Lithuania.
According to him, the sufficiently low and still controllable level of the state debt will also determine the growth of Lithuania’s competitiveness in the European region.
Life insurance market to grow
Taking into consideration the positive forecasts for the Lithuanian economy, the favourable trends in the international markets, as well as reduced consumer spending, Aviva Lithuania experts forecast the growth of the Lithuanian life insurance market.
"The reaction of the life insurance market to the tendencies of GDP and the financial markets is sensitive. We forecast that, this year, the long-term savings market will grow even faster than the economy in general – compared to the year 2009, the premiums of newly made life insurance agreements should grow by 36% in the market, while the growth of the premiums of all agreements should be 14%. We anticipate that this year our company, Aviva Lithuania, will also grow by 21% which will be achieved by signing life insurance agreements with premiums of 99.4 million litas," says Asta Ungulaitienė, director general, Aviva Lithuania.
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For more information please contact:
Vaidotas Aleksiunas
Marketing executive
Telephone: (8 5) 269 0620
Mobile: 8 682 222 01
E-mail: vaidotas_aleksiunas@aviva.lt