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According to economists, people wait patiently for the pandemic to end and can relax by spending money. True, such financial relaxation can be repeated: experts are already talking about a possible increase in prices.
Lithuanians continue to accumulate money for better times in banks through quarantine. And in the face of uncertainty, he postpones shopping, travel, and entertainment. According to the Bank of Lithuania, in January, compatriots had already accumulated 18,000 million euros in deposits. Residents say that money is scarce, because there is nowhere to spend it:
“I stopped eating better, I ate easier, cheaper and clothes, of course, less.”
“Actually, two more times, he does not let anywhere, everything is closed.”
“When we didn’t buy anything, it really worked, full of pockets”
“I didn’t need jackets or shoes because I had bought them before.”
Others say that they have saved only a few tens of euros, because they have lost income due to the quarantine:
“We are in downtime, this is how we can save, because we are not working.”
“No, I failed, we sit at home, eat more.”
“I saved maybe 50 euros.”
“The only saving was that you don’t have to pay for kindergarten because the children did not go to kindergarten during the quarantine.”
While some residents are comfortable losing their jobs during a pandemic, others rejoice at the increased income and savings. According to the Bank of Lithuania, during the pandemic all deposits in banks were made with yeast.
The total level of deposits in banks increased by almost 30 percent last year and on January 1 of this year amounted to almost 32 billion euros. Of these, household deposits amounted to 18,000 million euros, a fifth more than in previous years. It is true that although people now save money and do not spend it, according to the Bank of Lithuania, this money will continue to return to the market.
“I think money should go into the economy. I don’t think it will go back to pre-pandemic levels. I think over a period of time, not a year. I would predict that consumption should return in a few years. But I think we can really expect a recovery. consumption ”, says Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania.
According to Swedbank, young people under the age of 25 accumulated the least during the pandemic. The young people managed to save an average of about 900 euros. And here, the largest amount of money saved by banks during the pandemic was for people between the ages of 46 and 64.
“Currently, on average, such a person has accumulated around 3,000 euros, which is 20-25 percent more than before the first quarantine at the end of 2019,” says Jūratė Cvilikienė, director of the Swedbank Financial Institute.
Lithuanian household deposit growth is the fastest not only in the Baltic states, but also in the euro area as a whole. And this, according to the economist Sigismund Maurice, was also determined by the rapid growth of wages.
“Last year, salary growth in Lithuania was one of the fastest in the entire European Union. It reached almost 10 percent and pensions grew quite solidly and the salaries of public sector employees,” says the economist Lygor chief, Sigismund Mauricas.
According to Jūratė Cvilikienė, director of the Swedbank Financial Institute, residents of Lithuania accumulate money not only in the checking account, deposits, but also at home in socks.
“We still do not see a large amount of money, it is the accumulated shadow money that is now circulating in the market.” Because when you buy a property, the payment is usually made in cash, ”said J. Cvilikienė.
However, economists predict that Lithuanians will not spend money as soon as the quarantine ends: shops, theaters, cafes and restaurants will open, and it will be possible to travel more freely. And such financial relaxation can be repeated: economists are already talking about a possible jump in prices.
“It is likely that when the quarantine is over, some of that money will flow into the economy, which will also encourage producers and sellers to increase prices as we will miss goods and services,” says Indrė Genytė-Pikčienė, chief economist by INVL. Asset Management.
It is true that the impact of the pandemic has not shaken Lithuania so far. The Bank of Lithuania provides the latest forecast: based on the main scenario, the country’s economy should grow 2.9 percent this year and 5.1 percent next year. And wages are expected to grow about 6 percent this year.
“If the recovery proceeds as we predict and economic development proceeds as we predict.” I think we have a sufficiently successful scenario for the medium term ”, says V. Vasiliauskas.
“However, this forecast seems quite optimistic, because we see that some countries of the European Union have again tightened quarantine conditions. And in general, the narrative prevails in the European Union that the quarantine regime is a normal state, ”says Ž. Mauricas.
Although the Bank of Lithuania offers a rather optimistic economic forecast, the Ministry of Finance is more restrained. The ministry announces that GDP growth will be 2.6 percent this year and just over 3 percent next.
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