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The global commodities crisis
At the beginning of the report, the economist said that she would discuss the economic situation of the main countries of the world and said that today we can observe the growing recovery of China.
“China’s sudden recovery is boosting world trade. China’s role in Europe has grown very strongly, both in terms of imports and export market.
After the pandemic, China recovered and drastically defeated the disease itself, in addition to injecting a lot of stimulus into the economy, China recovered very quickly. “They were the first to start showing growth and it has reached mature economies,” he said.
Speaking about the US, I. Genytė Pikčien this explained that this country is currently throwing a lot of money into the market, but this will be reflected in the country’s double-digit deficit.
“These are big fiscal holes and consequently those efforts will generate a bigger rally. The International Monetary Fund is forecasting strong growth in the United States this year. It’s a sprint,” he said.
However, the situation in the euro area is somewhat different, explained the economist.
“It is a region of several countries, the processes are not as fast and the promotion capacity is much more limited,” he said.
The International Monetary Fund has forecast 4.4 percent for the eurozone. rebound, but according to her, we had a significant drop last year, which means that the recovery may take some time.
“We see that the recovery pulse is widely felt, but that recovery is not going very well.
As you know, the pandemic, virus, quarantines and other containment measures last year reduced value and supply chains, causing local shortages of goods and raw materials. With its formation, commodity exporting countries began to restrict exports and tried to protect their domestic markets from shortages of these goods and raw materials, and importers began to accumulate stocks. This has shaped expectations of price increases, ”he said.
The prices of raw materials, according to the economist, are also driven by the recovery of the industrial and construction sectors of the world.
“Industrialists expect growing orders, growing demand, growing exports and painting the future rosy. There is a great commotion in construction, not only in Lithuania the market beats with increasing frequency. That is the case of China.
“The crisis of the shortage of insulating materials and the shortage of polystyrene in the case of wood has also been felt, as Russia threatens to cut off the supply. Currently, several wood panels are in deficit and their prices are changing rapidly. It is logical that the increase in costs is and will adjust the final results ”, said the economist about the possible increase in the prices of construction and real estate.
In conclusion, he said that after the first quarantine, the prices of almost all food raw materials skyrocketed. According to the calculated food price index, prices have risen by one third.
“Oils, cereals and other food raw materials became more expensive. The meat became more modest, “he said.
Lithuanians are getting richer
Talking about how Lithuania is doing, I.Genytė Pikčienė said that it is fun to do it, because even though the period was full of challenges and trials, this crisis was much milder for our country.
“It’s a lot of fun to excel in those macro careers in a good way. “We are among the leaders and countries that have been most successful in coping with the pandemic,” he said.
The economist also assured that as the number of people vaccinated increases, we will not have to wait until we can return to normal life, and then the economy will return to it.
“When people return to their normal rhythm of life, so will the economy. I would even say that we will do such an intensification, because we will all want to compensate for it both by consuming and by resting, and we will miss the services that were at the peak of the pandemic and we will be able to consume them, ”she assured.
I.Genytė Pikčienė also discussed the situation on the labor market. The economist said that there was a lot of anxiety last year and that unemployment in Lithuania was growing very strongly, but now unemployment is already decreasing.
“Our measures were not enough to curb the growth of unemployment, but as the economy recovers and businesses palpitate more, job performance is improving,” he said, referring to last year’s wage growth.
“We can see that the proportion of the population that receives less than a thousand. Eur gross, decreased, while the proportion of the population that receives more than a thousand euros in society – increased. This means that Lithuania is getting richer and our middle class is growing. This is very important, ”she said and was satisfied with Lithuania’s excellent sporting form.
Warned about inflation and the real estate situation
Still, as one of the concerns, the economist cited rising inflation and said prices are likely to continue rising.
“At the beginning of the year, when the international commodity market was not in full swing in terms of prices, we all thought that inflation would be in the spring, but it would recover from the base and then return to normality, prolonged and that The rebound in prices on the world market continues and intensifies.
And on the demand side, there is still not that coup that will begin when quarantines end everywhere. “The inflation outlook is unfavorable and is gathering momentum,” he warned.
The economist also said that the situation in the real estate market (RE) today is not entirely sustainable, and the most vulnerable are those who today buy housing for investment and do so with credit.
“Still, we must be calm, because they are not the most vulnerable people in society, they have the funds, they no longer need their first home and they must realize the risks they are taking.
As for house and rental prices, their growth has outpaced the rise in rental prices during the pandemic, which means that rents have also fallen, ”he said, saying that the European Central Bank should not go up. interest rates in the near future and we can all be more relaxed.
Are we too empathetic?
Speaking of public finances, the economist said that Lithuania should treat its public finances more carefully and that the economy no longer needs as strong a stimulus as planned.
“This promotion is not as necessary as planned, because according to the level of public debt, we are far ahead and even ahead of Latvia, which was in a worse initial position and had higher debt.
We have been too sympathetic to the economic recovery, which, as we can see, is practically no longer necessary now, “he said.
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