Page 23 - CE Outlook Regions 2024

2.2.1 GDP growth
Still high energy prices, rising production costs, and weakening demand in external markets will continue to have a negative impact on the Baltic economy in 2024.
There are no growth inducing factors for a whole 2024 in the Baltics. The Baltic growth will be affected by the general recovery of the EU and the world economy in 2024, as well as the course of the Ukraine war.
Besides, the Lithuanian economy will be adversely affected by severed relations with China and Belarus.
2.2.2 External environment
According to the Bank of Lithuania, the surplus on the current account balance (CAB) was slightly expanding throughout 2023 and amounted to €602.6 million in September. This was mainly determined by the primary income balance (€84.7 million) which turned from deficit to surplus . As imports of goods increased more than exports (4.6% and 3.5% respectively), the foreign trade deficit increased by 19.7% and amounted to €273.1 million. With a decline in exports and imports of services (by 3.5% and 5.1% respectively), the surplus on the balance of services slightly went down (by 1.7%), amounting to €757.6 million.
The negative net flow of financial account investment (€284.8 million) was mainly driven by the negative net flow of direct investment (€388.7 million) and portfolio investment (€174.4 million). CAB is likely to decrease in 2024 due to fewer direct foreign investments, tepid economic sentiment and falling exports and imports.
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