On April 25th European Business Network held a networking event at the Austrian Embassy, where Chief Advisor to the President of the Republic of Lithuania and the Head of Economic and Social Affairs Group Mr. Nerijus Udrėnas gave a presentation on the Outlook for Lithuanian economy in 2013.
He started his speech with a positive remark that the future story for the Lithuanian economy in 2013 is bright.
However, there might have been a different scenario, but concerted global action has averted a possible world-wide economic depression.
ECB and Fed kept drastically cutting interest rates, but to further ease monetary policy they have used “unconventional” tools, for example quantitative easing in United States of America.
But these “unconventional tools” do not always do all the magic. As can be seen after analyzing the Velocity of money in the USA, with the help of quantitative easing it dropped from over 2,1 to less than 1,5 in the years between 2000 and 2010.
Growth across the world and many problems of energy
2012 was a difficult year world-wide. The economies of USA, Euro zone, Japan, United Kingdom and China have shrunk or grew very little.
Some people even start remembering Great Depression and Hyperinflation of interwar period in Germany.
At the moment most of the stock prices are going up, while bond yields are droping.
While USA shale gas revolution has fueled Liquefied natural gas market, the energy sector in Europe is suffering.
Stock prices of nearly all Germany's energy companies continue to plummet. In the meantime, USA's natural gas reserves are growing.
Back to Lithuania
According to Mr. Udrėnas, Lithuania is well balanced and shows one of the best growth rates.
Output declines from pre-crisis peak went to the lowest point in the recession and Eurostat estimates show that Lithuania's GDP growth should be equal to 3,1% in 2013 and 3,6% in 2014.
Manufacturing sector remains our main strength, its exports continue to be a driver of the recovery.
Moreover, because current government has increased minimum wage by 25%, all wages will grow steadily - managers will have to raise wages of other, more qualified employees to restore proper incentives.
When summing up his presentation N. Udrėnas said that Lithuania’s economy is on a right track and will continue to demonstrate impressive results in comparison to other European countries. The Main driver behind its growth is and will remain so for some time – exports. Also, more investments from business should be expected.
EBN reporter Edgaras Savickas