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Speaking about the use of state support, the head of LAC raises the question of whether the double-digit budget deficit and the growth of debt create potential for the future. According to V. Vasiliauskas, the impact on the budget deficit with new aid measures is increasing.
“We tried to calculate the impact of the measures, they changed. There was first, second stage, then they intensified, new measures were announced. The impact of the first package is the strongest on economic growth, amortization, and then, with each package, that impact decreases, it won’t say the same about the impact on the budget deficit.
If all the measures were implemented as planned, the budget deficit would exceed double digits. Here we would be the forerunners. I would point out that debt growth would also be one of the largest in history.
If we tackle all the measures, the growth of the debt is more than $ 9 billion. EUR. The numbers are impressive. (…) The question is whether it creates potential for the future or not. There are many question marks here. We are not like a big economy: to invest money from left to right, we need to put the pipette in place so that we can then create potential in the medium term, ”said V. Vasiliauskas.
“When it comes to incentives of this magnitude, they must first be in the budget. It doesn’t matter that the fact is just over 10 percent. Tax deferrals are the most poignant. My message is, how can those measures go next to the budget? It looks strange, “he said.
At the meeting, Ingrida Šimonytė mentioned that after this crisis, many will remain in state business in various ways. She asked if ALC saw any risk here.
“Other countries have similar instruments: they also invest not only through debt instruments in the real economy, but also through access to capital. We decided that such an instrument could also be created in Lithuania. It is better to have and try than not to have. Undoubtedly, there are dangers, ”said V. Vasiliauskas.
Presenting Lithuania’s economic prospects, V. Vasiliauskas pointed out that there are many uncertainties at the moment. The Bank of Lithuania modeled three scenarios: optimistic, basic and pessimistic.
“Lithuanian labor market: we see a significant decrease in the number of insured people. This means that unemployment has increased by approximately 2 percent. May. The data shows stabilization,” says V. Vasiliauskas.
In terms of daily cash flow, April is the blackest month. – contraction that has occurred.
“In terms of companies, a fifth, in terms of households, a third. May. The flow shows that there is some stabilization,” he said.
He points out that inflation is the most affected by the price of oil and its fall.
According to the updated base of the Bank of Lithuania, vol. and. The most likely scenario is that Lithuania’s GDP will fall 9.7 percent this year. At the end of March, GDP in the baseline scenario is forecast to decrease by -11.4% in 2020.
The smaller decline is forecast for a relatively good first-quarter GDP result (+ 2.4%), not as strong as the expected decline in trade (-14%) and industry (-12.5%) in April, which will likely be the worst month for the country’s economy.
“The data for the first quarter surprised: 2.4 percent of Lithuania. Economic growth,” says V. Vasiliauskas.
Speaking about the economic situation of the individual areas of activity, V. Vasiliauskas points out that the contractions have taken place both in industry and in commerce.
According to him, in May. the data shows the activity of the returning population.
“The mobility of the population is recovering. If during the heat itself mobility was 60-70 percent. Decreased, it is in May. According to the data, the activity is 30%,” said V. Vasiliauskas.
Electricity consumption has also stabilized.
Due to the impact of the pandemic, the unemployment rate is expected to rise this year to 11.9, the average wage will drop 2.6 percent, and inflation will hit 0.6 percent.
“Investment and exports are two worrying numbers. Exports are close to 14 percent. Contraction, unemployment rate: around 12 percent. We forecast a drop in wages of -2.6 percent.” V. Vasiliauskas presented the forecasts.
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