V. Apoka: we will have a deficit this year, next year we will have to freeze unnecessary launches

20222023 Average growth of 2.3% is expected.

Vilius Apoka, the finance minister, who presented the forecast on Monday, said the latest figures show that the situation is not as dramatic as previously expected, and gives widespread optimism.

What is lm? We had balanced finances, we achieved the highest credit ratings in the history of Lithuania and tourism, which was the hardest hit by the pandemic, represents a relatively small part of the economy in Lithuania, V. Apoka told reporters on Monday.

Forecast will be based on budgets

Asked about how the budget structure, income and expenses will change, taking into account the latest forecasts, V. Apoka emphasized that although Lithuania withstood the economic tests much better compared to other European Union countries, the situation due to the pandemic of COVID-19 remains uncertain.

Therefore, we must be vigilant and protect the most vulnerable first. When planning a budget, it is important not to increase unnecessary costs, change the structure of the economy and invest in the future and create added value, emphasized V.apoka.

The minister also says that the elaboration of the budget has not been completed and the macroeconomic scenario will be the basis for the elaboration of the same draft, which will be presented to the Government and the Seimas in mid-October.

Aiku, we will have a deficit. I will repeatedly emphasize that the budget must be safe. Yes, we must choose the most obvious, but we must stop the illusions not in the areas of prime necessity. Due to the uncertainty, the business will tend to stop investments, so public investments should be merged, added V. apoka.

In January 2020, the central government deficit was 1,831 million. The central government deficit reached around 4% of GDP and exceeded the deficit threshold of 3% of GDP, but during the pandemic, European fiscal discipline rules were introduced to give Member States more space to manage the crisis through a higher budget spending and public investment.

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V also points out that, following the announcement of the COVID-19 pandemic in March, the tightening of economies and the imposition of strict quarantine conditions in many European countries, the EU GDP in 2020 II quarter compared to 2019 In the second quarter, it was down 13.9%.

The Lithuanian economy has suffered the most devastating impact in the EU and will attract 4%. Maesn smg The EU is only affected by the Irish economy, which fell 3.7%. The Spanish economy suffered the most, contracting by as much as 22.1%, Eurostat announced on Tuesday.

Due to the poor situation of foreign trade markets, Lithuanian exports of goods and services (at constant prices) will fall 7.2% this year, the ministry predicts.

We expect our partners to recover fairly quickly next year, we will have domestic demand. However, a vaccinia virus has not yet developed. On the other hand, we believe that drastic measures will not be taken to manage a pandemic once, the finance minister said on Tuesday.

Inflation falls below 1%

According to the Ministry of Finance, the inflation rate should be maintained in the second half of the year due to the fall in oil and other energy raw materials and more favorable food prices. The average annual inflation in the country in 2020 amounts to 0.9%. 2021 Energy commodity prices are not expected to rise to 1.8% and 2% at the end of the medium term.

Domestic demand will remain strong

The labor market situation remained relatively good in most economic activities in the second quarter, despite the COVID-19 virus pandemic and the quarantine in the country. Although the annual variation in the number of employed persons was negative in the second quarter and amounted to 2.2%, gross wages and salaries (UD) grew by 8.5%, so the strong purchasing power of the population remained strong due to low inflation rate.

The unemployment rate will rise to 8.8% and the employed population to 1.9%. Government subsidies to companies for downtime and support for the self-employed, as well as the ability of companies to adapt to operating in the worst conditions of a pandemic, have a devastating effect on changes in the number of positions of work and employment. In 2021, with the recovery of economic activity and the growing demand for labor, the unemployment rate will reach 7.9% (in the next medium-term years the unemployment rate will be lower and at the end of the medium term it will be 6.6%).

Salary trends

The impact of the pandemic on the labor market will slow the growth rate of depleted uranium. throw DU will grow the most in the public sector. In the private sector, wages will increase at a slower rate for some companies due to declining supply and demand. The average monthly gross DU in the country is expected to grow 6.5% and in 2021, juice growth rate up to 3.3%. In the last medium-term years, with the unemployment rate and the strengthening of labor demand, the growth rate of depleted uranium in the country will gradually accelerate and will approach 5% at the end of the period.

Much risk remains

In the first half of 2020, the country demonstrated resilience to the effects of the COVID-19 pandemic, with an increase in economic activity seen since May. However, the pandemic will increase uncertainty, the risk of a resumption of global trade tensions, high uncertainty about the global economic recovery and increased geopolitical tensions remain key risk factors that could lead to changes in key indicators. in this scenario, according to the Ministry update.

Also, both in Lithuania and in the external environment, with the prevailing uncertainty about the development of the pandemic, a more rapid acceleration of the investment process is expected in the near future. According to the Ministry, the acceleration of the tendency of the private sector to invest will be supported by the acceleration of the project financed with community funds and the implementation of the measures of the DNA Plan for the Economy of the Future.

PHOTO GALLERY Forecast of the Ministry of Finance 20200914 (15 photos)

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