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Lithuania's trade deficit gap in 2006 on wage growth

Lithuania's trade deficit widened last year to 14.26 bln litai ($5.37 bln) as rising wages boosted imports of consumer goods.

The deficit widened from 10.38 billion litai ($ 3.9 billion) in the previous year, the Vilnius-based Statistics Office said on its Web site today. Exports grew an annual 18.4% and imports advanced 23%. Rising wages in the Baltic country are boosting consumer demand for imported goods such as clothing, furniture and cars as citizens try to raise their living standard to the western European levels. That's widening the current-account deficit because imports outpace exports. „Competitiveness of Lithuanian exports weakened last year on higher inflation, very fast wage-growth and a somewhat stronger litai against the dollar,” said Vilija Tauraite, an analyst with SEB Vilniaus Bankas, in an e-mailed note. Foreign trade trends are likely to remain similar this year as domestic demand continues to be strong and the pace of import-growth will only show a minor slowdown, she said. In December alone, the country had a deficit of 1.45 billion litai ($546 million). Exports in December fell an annual 0.3%, while imports grew 9%, the statistics office said. Lithuania's economy, the biggest of the three Baltic states, expanded a preliminary 7.4% last year. (Bloomberg)