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Lithuanian Economy Shrank 22.4%, EU’s Worst Recession (Update2)
By Milda Seputyte
July 28 (Bloomberg) -- Lithuania’s economy plunged a preliminary 22.4 percent in the second quarter, the worst recession since 1990 independence, as output crashed and retail sales slumped.
The decline, the deepest in the European Union, compares with a revised 13.3 percent contraction in the first quarter, the Vilnius-based statistics office said in an e-mailed statement today. The economy grew 5.2 percent in the same period last year. The median estimate of four economists in a Bloomberg survey was for a 17.7 percent decline. The economy shrank 18.1 percent through the first six months.
The Baltic economies of Estonia, Latvia and Lithuania are collapsing after a real-estate bubble burst, cheap credit evaporated and slacking demand in foreign markets undermined exports. The three countries, which had the EU’s fastest growing economies from 2004 to 2006, now have the steepest declines of all developing regions, the World Bank said on June 22.
“I checked whether I didn’t go blind,” said Violeta Klyviene, the chief Baltic economist at Danske Bank. “It’s either the bottom or we’ll see one in the third quarter.”
Stockholm-based SEB AB, the largest bank in Lithuania, and Swedbank AB, the biggest bank in Estonia and Latvia, face soaring loan losses in the Baltic states, which are suffering from the deepest recessions in the European Union.