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The Bank of Lithuania submitted three forecasts to Seimas on the extent to which the economy could shrink. In the best case scenario, the economy will shrink by 3.4 percent, in the base or main scenario, by 11.4 percent, and in the worst case scenario, by more than 20 percent, he predicts the Bank of Lithuania.
Under the baseline scenario, wages could be reduced by 2.6 percent and the unemployment rate would reach 12.5 percent.
“According to this scenario, in 2021 the economy would begin to return to the pre-crisis level, and growth would be almost 10%. But even so, growth would not return to the pre-pandemic level,” said V. Vasiliauskas on Tuesday. , Chairman of the Board of the Bank of Lithuania, from the Seimas rostrum.
According to him, the economic contraction in the euro area, the United Kingdom and China is greater than it was during the 2008-2009 crisis.
It is observed that during the quarantine 9 percent. Decrease in electricity consumption, 99 percent. Fewer passengers at airports, 6 percent. retail sales decreased. It is true that non-food sales declined.
“The intensity of movement is 40 percent. Lower, it is true, it should be noted that in March, it was 70 percent. Less movement. Now it is still small, but the trend is positive,” said V. Vasiliauskas.
Photo by Julius Kalinskas / 15min / Vitas Vasiliauskas
It is estimated that 16 percent. Employees of Lithuanian companies have been declared inactive. However, according to V. Vasiliauskas, there is a slowdown in the growth of unemployment.
Wages fell further in lodging and food service activities, where they fell by as much as 11%, in commerce, by as much as 3%, and in entertainment and recreation activities, by as much as 3%.
However, according to the Bank of Lithuania, inflation fell to 0.9%. and this was mainly due to the drop in oil prices. According to V. Vasiliauskas, the central bank does not forecast deflation.
During the 8 weeks of quarantine, new business and home loans fell by 30% and consumer loans by 45%.
Up to 10% applied to banks for loan deferrals. population and up to 30% of companies.
This year’s budget needs to be adjusted
V.Vasiliauskas declared that the government’s financial support to the population and companies affected by the coronavirus crisis should “go to the budget.” This is written by BNS.
“It is necessary to bring all the measures to the budget, in other words, without the budget amendment, the so-called supplementary budget, in our opinion, it would be difficult to move forward this year.”
According to him, the adjustment of the budget is necessary due to the increase in public spending and the decrease in income.
“Without budgetary adjustments, in my opinion, it would be difficult to advance in a parliamentary republic. Therefore, we say that really all the measures of expenses and income should be reflected in the adjusted budget,” V. Vasiliauskas explained to the parliamentarians.
Later he emphasized to the BNS that it would have been correct to amend the budget in March, when Seimas approved the 5 billion. debt limit in euros to stimulate the economy.
The budget needs to be adjusted due to increased public spending and decreased revenue.
“If there are major corrections, and if we accept a really big correction of 5 billion euros, it would be very correct if it were reflected in the budget,” said V. Vasiliauskas.
However, according to him, it is not too late to adjust the budget.
“When we talk about such packages of measures and see the downward trend in revenue accordingly, this step in the budget review would be very natural. I would say that it could now also be stepped up,” V. Vasiliauskas told BNS.
Prime Minister Saulius Skvernelis and Finance Minister Vilius Šapoka say there is no need to adjust this year’s budget yet.
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