Economists have estimated unexpected indicators: we can reach Western Europe much faster in terms of quality of life

According to the EC, a partial recovery is expected in 2021: GDP will grow 6.7%. As in the spring, the EC predicts that a significant decrease in energy prices will lead to inflation of 0.8% this year, and due to the expected increase in oil prices and the recovery of aggregate demand in 2021. Inflation is expected to reach 1.5%.

The economic development scenario of the Ministry of Finance predicts that this year the Lithuanian economy will decrease by 7% due to the shock related to the crisis of the COVID-19 virus, and GDP will grow 5.9% in 2021. (In 2019 , stood at 3.9 percent). Later, GDP could grow 2.6% on average. by year.

Successful circumstances for Lithuania

When economist Žygimantas Mauricas was asked if Lithuania is really better than other European countries, he emphasized that some economic indicators are really surprising. For example, it seems that we are used to the fact that if a crisis comes, Lithuanians will suffer more than the rest of Europe. It is true that Lithuania is currently in a rather optimistic situation.

“It just caught our eye then. It can be said, and this is already confirmed by the European Commission forecast, which was updated on Tuesday. This forecast indicates that the Lithuanian economy will drop less than the European Union average this year. Meanwhile, a few months ago the forecasts were not so optimistic. I thought that Lithuania’s suffering would be even less.

This means that Lithuania will suffer significantly less than the rest of the European Union and this will be very unusual for Lithuania, as both in 1999, when Russia filed for bankruptcy, and in 2009 and 2015 during the economic slowdown due to the Russian embargo, the Lithuanian economy fell more than EU Average.

It is as if we are already used to the fact that if a crisis comes, Lithuanians will suffer more than the rest of Europe. But this time, due to certain circumstances, there is also a considerable success factor, a pretty good reaction on the healthcare front, precisely due to the fact that Lithuania has suffered significantly less from this economic crisis. If the situation does not change radically, if we do not have a second wave or do not get porridge, especially in the run-up to the elections, we should come out with much less damage and get closer to the Western European average. “Mauricas

“In a decade, Western Europe may have to chase Lithuania,” Ž. Maurice also expressed on the social network.

Dubnikov: Lithuania has been lucky twice

Marius Dubnikovas, associate professor at the VU Business School Partnership, assures that internal consumption is not as important as the situation in other countries that are important to Lithuania.

“We must pay more attention to this, because we have discussed a lot about internal consumption, which will fall much less, but neighboring countries have a much greater influence on us than internal consumption.” First of all, Germany, the Scandinavian countries, the Baltic states. Lithuania has been lucky twice here.

On the one hand, we were a little on the fringes of Europe and we did not have a single normal airport through which we would have brought many viruses and what made us feel less sick, the second thing we were lucky with was the Germans, who are our major partners today. doing unprecedented things, they’re probably in the middle Top 3 countries in the world as much as they make money compared to their economies.

Another very good thing is that the Germans seem to be shaping a certain shape. In this crisis, we must still be brave, spend money, invest it in the market, reduce taxes, and this is likely to be reflected in the policies of the European Union, what we can expect. We can expect that we will receive those billions from the EU, whose guarantor may be Germany itself, ”says M. Dubnikov.

The biggest risk is next year.

After asking about other Baltic states, Ž. Mauricas emphasized that Lithuania is doing really well so far, we are in a good starting position. However, according to the economist, the greatest risk arises when it comes to next year and especially on Lithuania’s public finances.

“There are opportunities and threats. In terms of opportunities, our economic structure is more favorable to this crisis, since the Lithuanian industrial sector is dominated by the food industry, which has been relatively less affected by the crisis. The electronic industry has also suffered less compared to Estonia, as the decline in industry in Lithuania is the smallest compared to the Baltic countries.

Also the other good thing is that at the beginning of the year we start with a slightly higher note. Growth in Lithuania in the first quarter was the fastest of the three Baltic countries. So there is a good chance that if we don’t make porridge ourselves, we should end up better than Latvia and Estonia. (…) But the biggest risk is that, I have said many times before, that it is very important to start stimulating the economy on time, but it is also very important to finish it on time.

The biggest risk is for next year and especially for Lithuania’s public finances, because in the absence of a greater need to stimulate the economy, and we have previously opened our economy, companies can already generate income to survive, there is a significant risk of that we move part of that financial envelope was never used.

Politicians may be tempted to simply divide that money into left and right. There is money left, let’s divide it into an interest group, another interest group. Such distribution of money can end badly “, assures the economist.

Will we live better than Italians?

Currently, the worst situation is in Italy. According to M. Dubnikov, Lithuania is catching up with this country at a fairly fast pace.

“It just came to our attention then. Italians have not managed their economy in 20 years. The quality of life there is improving in much smaller steps than in Lithuania. Italians now have an even bigger crisis than they had before the coronavirus .

Now they have the epicenter of all this disease and it is very possible that we will reach the Italians quite quickly, “says M. Dubnikov.

We will receive returning migrants

It is true that some very important questions remain for the future. One of them is what will happen to wages and we will get a wave of returning migrants?

“Convergence is both in revenue and in prices. On the revenue side, of course, it happens faster. Therefore, calculated on the basis of parity of the purchase price, taking into account the price level , Lithuania is following fast enough steps in the EU. I think that trend will continue in the future, but I can also give an example. If we have nominal numbers, regardless of the price level, we have already reached 50% this year. Europe level western, but we are 2.5 times behind in terms of wages.

This means that there are certain challenges in Lithuania due to the economic structure, due to the peculiarities of a certain redistribution of the pie. Workers are even less likely to benefit from economic growth than people in Western Europe, ”says Ž. Mauricas

It is possible that all these circumstances and the situation in other countries determine that more migrants decide to continue their future and work in Lithuania.

“If we use the funds we purposely have to expand the economy, the output of GDP, wages are likely to rise. Perhaps we can transform our economy from that manufacturing to an IT or digital economy.

There is an opportunity here, but it is necessary to make clear plans on how we will use the funds that are already planned and those that are to come. And due to emigration, it is unequivocally. Already in the last year we have seen that these processes are accelerating and the desire to drive somewhere will probably decrease, in addition there is a market like Great Britain, which is gradually closing, which was one of the most popular directions ”, considers M. M. M. M.