(RTTNews) - Thursday, Lithuania’s central bank lowered its growth outlook for 2009 citing deepening economic slowdown.

The Lietuvos Bankas expects the economy to contract 4.9% in the current year, down from 1.2% growth predicted in October 2008. Gross domestic product or GDP is forecast to fall 3.9% in 2010. The central bank added GDP is expected to reach its lowest level in the second half of 2010.

At the same time, the central bank lowered its inflation outlook for 2009 to 5.8% from an earlier projection of 6.9%. It is expected to fall further to 4.4% in 2010.

The contraction of the economy would have profound impact on the labor market. The rate of unemployment is forecast rise to 10.2% from 7.9% predicted earlier. For 2010, the central bank sees the jobless rate at 11.6%.

“Following extensive changes in economic development in 2008, negative GDP growth is projected for the two coming years. Domestic demand will continue to slow down, however, net exports growth will be positive. At the same time, both inflation and current account deficit will fall rapidly,” the central bank said in a statement.

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