By Angele Kedaitiene. According to just released summer economic growth forecast of the European Commission, Lithuanian economy will grow up by 3,1% this year, in 0,4 pp faster than foreseen by spring economic growth forecast of the European Commission. In 2020, the economic growth will slowdown to 2,4 %.
European Commission has underlined strong labour market position and reduced taxation of labour force, what would increase the private consumption. Lithuania has improved the use of EU funding, what will foster the investments.
Lithuanian economic growth will base itself on internal consumption rather export markets, as the export growth will slowdown. Inflation will account for 2,2%.
According to the European Commission, the forecast for euro area GDP growth in 2019 remains unchanged at 1.2%, while the forecast for 2020 has been lowered slightly to 1.4% following the more moderate pace expected in the rest of this year (spring forecast: 1.5%). The GDP forecast for the EU remains unchanged at 1.4% in 2019 and 1.6% in 2020.
What makes Lithuania a pretty successful country in economic terms? Hopefully, number of factors, but first of all – Scandinavian path of development, with emphasis on knowledge and education, work and employability, on innovations and wider global outlook, on mentality of perseverance. Lithuania has one of the highest globally share of the population with higher education, and first in EU, around 70% of the secondary school graduates go to the universities, and more than 90% of university graduates are employed right after the graduation. The problem of youth unemployment just relatively small.
The recent Lithuanian Government pays attention also to the living standards of the population. The average brutto salary accounts already for more than 1200 EUR, minimal wage as from 2020 will increase to 607 EUR. The newly elected President Gitanas Nauseda, who is high level economist himself, has emphasis the establishment of the welfare state.
In general, Lithuania is the largest economy of all Baltic states, it has also the highest GDP per capita in the Baltics. In 2018, the GDP per capita, in Lithuania has accounted for 81% of EU average, the same as in Estonia, but more than in old countries of the Eurozone Portugal and Greece, also more than in neighbouring Poland and Latvia. On the global level, when adjusted by purchasing power parity, GDP per capita accounts to 175 percent of the world’s average.
However, Lithuania would be far more developed economically, if not the last financial and economic crisis of 2008-2009, since GDP has reached the level of 2008 just in 2018. The Lithuanian Government, similar to other countries of the European Union has applied austerities policy to deal with the crisis, what actually deepened it, with GDP drooping even by 15% in 2009. Finance and Budgetary Committee of the Lithuanian parliament has opened the investigation in the actions of Lithuanian national bank, and Lithuanian Government during the crisis, with preliminary report that it were mistakes made, especially in the financial supervision of the Swedish banks, which dominate the market.
During the times of recent independence, reaching soon 30 years of anniversary, it were more years, which has slow downed the optimal path of economic and social development, such as transition to market economy, also Russian financial crisis of 1998, with some mistakes made.