(Adds quotes on euro, market worries)
By Nerijus Adomaitis
VILNIUS, May 28 (Reuters) - Lithuania's economy shrank by more than previously thought in the first quarter, revised data showed on Thursday, and the prime minister said the contraction for the whole of the year could be as much as 15 percent.
Like Baltic neighbours Estonia and Latvia, Lithuania is in the grip of its worst post-Soviet recession thanks to the global credit crunch. The problems in the region have also overshadowed top Nordic banks, which expanded rapidly in the three countries.
Fears of problems for the banks such as Swedbank
Latvia has already had to reach out the the International Monetary Fund for help in the crisis.
"There are some signals the recession could be deeper than the last forecast of the Finance Ministry (-10.5 percent)," Prime Minister Andrius Kubilius told reporters.
"Our strategic goal is to have the euro as soon as possible, but it would not be very prudent to give an exact date when the recession can be as high as 12 or 15 percent," he said.
He saw the euro being adopted in 2011, under an optimistic scenario, but said he was cautious on making further budget cuts, needed to cap the deficit, as he did not want to send the economy into a downward spiral.
The extent of the spiral became further apparent when revised first quarter gross domestic product (GDP) data showed a 13.6 percent drop in output, worse than the first estimate made for the period of a 12.6 percent fall and the fall of 2.2 percent in the last quarter of 2008.
On a quarterly basis, the drop was 10.5 percent, worse than a preliminary estimate of -9.5 percent. The statistics office said all sectors were down in the first quarter. Household spending also fell 15.1 percent from a year ago.
EURO, BUT NOT AT ANY COST
Commercial bank analysts polled by Reuters in April expected Lithuania to adopt the euro only in 2014 and its troubles have worsened since then.
The cost of insuring Lithuanian debt against a default or restructure rose after the GDP news. Five-year credit default swaps (CDS) were quoted at 419 bps, up sharply from 393.2 bps on late Wednesday, according to CMA DataVision.
The government has said it aims to keep the budget deficit this year within the European Union limit of 3 percent of GDP in order to adopt the euro. Lithuania aims next month to issue a eurobond of 500-600 million euros to help finance the gap.
He said the deficit was currently around 5 percent of GDP.
"Of course we are proud to have achieved a fiscal consolidation of around 7 percent of GDP in the first half of the year," he said.
"But we understand that further cuts should be considered in a very careful way not to push the whole economy into negative spiral," he added.
"The euro is a very important instrument, but the goal is a good economy and better life, not just to have euro banknotes instead of litas," he said. (Reporting by Nerijus Adomaitis, writing by Patrick Lannin, editing by Patrick Graham)