Mauricas sees three reasons why the Lithuanian economy will hold up better than others: the light at the end of the tunnel is already visible

Although you don’t want to say “op” without jumping through the ditch, Ž. Mauricas assures that the strategy chosen by Lithuania to combat the difficulties encountered, at least economically, will pay off.

“Even if the quarantine lasts longer, which is a high probability, I would not even rule out the possibility that by spring, and not necessarily at the beginning of it, I believe that Lithuania will be one of the least economically affected countries in any case.” , says Ž Mauricas.

According to him, the growing death statistics are now worrying. However, in economic terms, he mentions three components that have been successful enough for Lithuania and allow people not to be afraid of jobs or income in the future.

“The good expectations from consumers are especially surprising: the household confidence indicator in December, contrary to expectations, did not decrease, but even increased slightly compared to November, despite the tightening of quarantine restrictions.” This can be explained by the fact that after the spring quarantine, contrary to fear, the economy has returned to its cancers very quickly, it has experienced a “V” shaped recovery, so this scenario is expected to repeat itself. also this time “, says Ž. Mauricas.

Generous state support, such as compensation for downtime, tax deferrals, etc., and countercyclical tax policies, eg. Eg a significant increase in old-age pensions, an increase in the minimum wage, improves household expectations.

“Finally, the news of the COVID-19 vaccine turned on the light at the end of the tunnel and gave hope that life would return to normal in the spring,” says Ž. Mauricas.

Three strengths of the Lithuanian economy

According to the economist, the damage to the state economy depends on the strategy chosen by the state, and for small open economies, such as Lithuania, also on the strategy chosen by neighboring countries.

However, the post-pandemic outlook will depend on three things: the strength of quarantine restrictions, the scale and effectiveness of state aid, and the country’s current economic structure. When evaluating these three aspects, Lithuania is in a better position compared to the EU average.

“Europe is under severe constraints and the impact on economic activity will be significant, at least this year. Then there is the question of how quickly we will recover in 2021. Britain is projected to reach pre-crisis levels in 2019, not in 2022, but in 2023. Which means that the well will be large enough. Other countries, the Scandinavian countries say, are projected to return to pre-crisis levels by 2021. Again, the differences are large and will determine in to a great extent the negative impact of the pandemic on economies ”, explains Ž. Mauricas.

According to him, there are some countries that coped better with the pandemic and obtained less results.

“Where there was no great first wave, there is now, and where there was, there is no second wave as great. Let’s say no one is panicking in Spain anymore, Eastern Europe is now in panic. The British went into both the first and second waves for inexplicable reasons. There do not seem to be as many restrictions in Finland and Norway, but the epidemiological situation is also good. Even Sweden, compared to the EU average, appears to be good enough, given the strategy they chose not to introduce universal quarantine ”, Ž. Mauricas.

Although currently the pandemic situation in Lithuania is the most complicated, according to Ž. Maurico, the economic impact of the second quarantine is likely to be less than that of the first. Lithuania was lucky that during the first quarantine the restrictions were soft and brief enough.

“Our economy has been suspended for a very short time, at least in the spring, during the biggest panic. Many activities were allowed, free movement, so transport, industry quickly recovered, and the Scandinavian countries helped us a lot. The second quarantine is not so terrible anymore. Consumer expectations, when announced in December, are impressive, having even improved compared to November, despite a stricter quarantine. This shows that people are still waiting for their income to grow, the state will help them, and this is all temporary, maybe the vaccine has given that boost, ”says Ž. Mauricas.

The second aspect is state aid. Here, the economist also expresses his praise for Lithuania’s decisions.

“Positive government assistance is reflected in expectations; let’s say compensation for downtime during the second quarantine has become more generous and has risen to 100 percent of the previous salary. There is no talk of belt-tightening and you’re well done that is not talked about. The increase in old-age pensions and the monthly minimum wage also send the message that everything possible is being done to avoid an economic crisis in the near future. I think the new government will be able to do that, because the first battle is already won, because the expectations of both consumers and companies have not diminished even with the tightening of quarantine conditions ”, says Ž. Mauricas.

And the third aspect, the economic structure, is important because the pandemic has restricted only certain sectors, such as tourism.

“This pandemic is special because it has affected different economic sectors in very different ways. Even for us economists, it was a big surprise. We expected some differences, but we didn’t expect such big differences. We are seeing a complete recovery in the form of the letter ‘K’, with some sectors on the rise, such as retail, where turnover is higher than last year, despite the crisis. But the service sectors have been hit hard, others don’t even see the light at the end of the tunnel. Especially airlines, air transport, hotels, now partly and restaurants, have many questions ”Ž. Mauricas

According to him, the Lithuanian economy does not depend as much on the latter sectors as the southern European countries, Lithuania is not concentrated and there is a lot of air transport, which could lead to a major recession and so on.

“They don’t break into the same river twice and the economy after the pandemic will be different than before the pandemic. Those changes that usually occur in 5 to 10 years have occurred in less than a year, a huge transformation. Countries that will be able to transform, adapt, they will have less of an impact, that again, I think Scandinavians are here first. We too will certainly suffer less simply because of the economic structure. “Ž. Mauricas.