He estimated how much Russia’s GDP could fall: Lithuania is not threatened by such figures
“Russia is isolated from the rest of the world. 15-20 percent may shrink Russia’s GDP. This state has created such a recession and such problems for itself.
Lithuania is not threatened by such recessions even in the most negative scenario: if exports between Russia, Belarus and the West stopped completely, we could talk about 1-2 percent. shrinking Lithuanian GDP, ”said N. Mačiulis.
According to him, Lithuania is less dependent on Eastern markets.
N. Mačiulis stated that stagflation has not yet reached Lithuania, but the risk of this phenomenon is real. Stagflation is a situation where prices rise (inflation), there is a high level of unemployment, and economic growth stops (stagnation).
“So far, we are clearly seeing inflation, which in a quarter of a century in Lithuania is mostly in other European countries. At the same time, we see that household consumption is still growing.
“In the first months of the year and exports, the volume of industry is growing rapidly, but such a risk, because with such a rise in prices, the purchasing power of many people is already declining,” said the economist.
According to him, it can already be seen that the number of household deposits decreased by the month.
“Some people may have even had to pay for their bills – especially heating, electricity and gas -” he said.
According to the expert, energy prices are a big problem – not only for residents, but also for business.
“It simply came to our notice then that there would be no fear of a deep crisis, recession or stagnation. He still sees demand both in the domestic market and in other major export markets that are not east of Lithuania.
In this situation, business is probably mainly worried about inflation and the rise in commodity prices. “We see both metals and grain and energy resources – there are record prices,” said the economist.
However, consumer confidence indicators and business expectations show that the economic situation “is not as bad, it is even better than it was at the beginning of the pandemic”.
According to N. Mačiulis, the European Central Bank is likely to increase the base rates, but it would not be worthwhile for borrowers to fear that they will become more expensive.
Expectations are emerging in the market that the European Central Bank’s anti-inflation rates will rise and EURIBOR (European average interbank market rates – ed.) Will be positive by the end of the year, and will exceed one percent next year. This is what the markets now expect, as shown by EURIBOR futures (…)
It is probable that the European Central Bank may increase the base interest rate a couple of times, raise it to zero, but it will not rise higher, so at least on this front it is unlikely that the population should be very worried and higher interest rates should be depressed, ”said N. Mačiulis.
He added that in any case, raising the rates will not reduce gas or oil prices and will not help fight the kind of inflation we are experiencing now.
Swedbank’s economist said it was not worth worrying about labor market trends either, as the reasons for the rise in unemployment or wage growth could not be seen.
“Nevertheless, the high demand for Lithuanian goods and those losses are lacking, in Belarus and Ukraine we will not be so high that it would stop the economic growth altogether. It is likely that wages and employment will continue to grow, ”says N. Mačiulis.
Speaking about employment, the economist expressed the idea that Ukrainians coming to Lithuania will contribute to the country’s economic growth.
“Ukrainians will even support the growth of the Lithuanian economy, because they do not have vacancies, people living in Lithuania wanted to be employed. And we will see both a slightly higher rating and higher employment as a result.
We are already seeing a recovery in tourism, especially this summer, and it is likely that there will be more Ukrainians working in the catering sector as well. This is where both sides win, ”said N. Mačiulis.
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