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Since Wednesday, much stricter quarantine measures have been in place in Lithuania than before.
The most painful solutions for companies are related to the closure of a large number of stores and restrictions on the service sector.
We discuss the impact of these restrictions on the economy and the measures planned by the government to combat the COVID-19 crisis with A. Romanovskis and T. Povilauskas in a weekly newscast.
Implications for the economy
The government says the Lithuanian economy will face a recession due to quarantine measures at the end of this year and in the first three months of next year.
That hit is obviously big. This is a great focus of what we saw in the second half of March, early April.
T. Povilauskas, an economist at SEB Bank, says that in forecasting the development of the economy, the bank anticipated difficulties in the aforementioned period even before the tightening of restrictions, and a stricter quarantine would hit even more.
“It just came to our attention then. This is a close-up of what we saw in the second half of March – early April,” said the expert, recalling the first quarantine in Lithuania in the spring of this year.
However, he said the industry is now working harder, export markets are also stronger, so the situation is not as bad as it was in the early 2020s.
During the peak of the first wave of COVID-19, the Lithuanian economy had contracted by 5% in April-June. Gross domestic product.
According to T. Povilauskas, now the extent of the drop will depend on how long the last strict restrictions continue.
Photo by Rokas Lukoševičius / 15min / Tadas Povilauskas
“If there is a significant lifting of restrictions in February or March, that decrease could be less than 5 percent in the first quarter of next year, but if it lasts longer, it could be greater than 5 percent,” said the economist .
According to Andrius Romanovskis, president of the Lithuanian Business Confederation, companies are now better prepared to work in quarantine conditions: they have improved their work organization and are looking for new ways to sell manufactured products or services.
However, he acknowledged that Lithuania would not escape the new economy, but to recover, the state would have no choice but to “send Knockdown first fight“.
Christmas gifts, but at what cost?
The new government plans to spend almost a billion euros next year to combat the consequences of COVID-19. She provided such an amount by modifying the state budget for next year presented by the outgoing Cabinet of Ministers.
This is probably the best Christmas gift first and foremost for employees, as subsidizing downtime means saving jobs.
Along with these credits, there will be some changes in the way the crisis is managed: the government commits to limit the number of beneficiaries of the allowances for job demand to 200 euros, reduce the list of self-employed who receive support from 257 euros, but intends to introduce a more business-friendly mechanism to subsidize downtime.
If the Seimas approves it, the state will compensate 100 percent. salary of the employee, but not more than an amount equal to two minimum wages or € 1,214 before taxes.
“This is probably the best Christmas gift first and foremost for employees, because subsidizing downtime means saving jobs,” Romanovsky said.
Photo by Luke April / 15 minutes / Andrius Romanovskis
According to him, that decision will also benefit the state, because it is cheaper for the state to pay such subsidies than to keep the unemployed.
The business representative also welcomed the decision to reduce the circle of people who receive a job search subsidy from 200 euros to about 30,000: “The State is still not a bottomless boiler from which you can get everything you want.” .
This decision was also supported by T. Povilauskas, but he has doubts about the change in the grant procedure due to inactivity.
“The scheme proposed by the Government, for me, is it becoming such, or is it just not too optimistic and ideal for everyone? We keep talking about borrowed money, “said the economist.
According to him, one hundred percent wage compensation from the state side is a good solution, but the two MMA limit is concerning. According to the expert, this would mean that the state would compensate the person who receives the average salary in the country by almost 90 percent. work salary.
123RF.com nuotr./Pinigai
“I may be wrong, but to this day it is the most generous subsidy program under this measure in Europe,” said T. Povilauskas.
Interlocutors who participated in the show also commented on the 7% expected by the Government for next year. the deficit of the public administrations, the slow wage growth and the decision to withdraw from the budget the European funds not finally approved in Brussels, which will finance part of the so-called DNA plan for the economy of the future.
You can see the full recording of the program here:
VIDEO: A stricter quarantine will hurt the nation’s economy – when will we back Knockdown?
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