Following withdrawals from second-pillar pensions, consumer spending in Lithuania rose sharply last weekend, exceeding even the level seen during the Christmas shopping period. SEB banka data show that payment card spending at retail outlets was more than 20% higher than over the corresponding weekend a month ago or a year ago.

"Spending grew fastest on higher-value goods – furniture (114%), electronics (89%), jewellery (86%) and telecommunications equipment (84%). There was also a substantial rise in spending on building materials (65%) and household appliances (47%), which suggests that some people channelled these funds into home improvements or larger purchases. The fact that most of the money is going into consumption is in line with forecasts. Growth in consumption of this kind may persist for several quarters and support Lithuania's economic growth in the short term, while at the same time pushing up inflation, which in our neighbouring country could reach around 6% this year," comments SEB banka economist Dainis Gašpuitis.

Citing the example of Estonia, Gašpuitis notes that a similar scenario is likely to unfold in Lithuania: "In Estonia, the withdrawal of second-pillar pension savings triggered a short-lived rise in consumption, but the effect faded relatively quickly, and retail volumes still lag behind the peak reached in 2022. The most significant challenge is that it was younger people and those in lower income groups who reduced their future savings the most. Although this allows them to address immediate financial difficulties in the short term, in the long term it increases the risk of inadequate pensions and inequality for these people in the future."