The Prime Minister Kirkilas announce in his radio interview that Lithuania is not experiencing any economic crisis.

He said that opposition politicians who are talking about an economic crisis must be experiencing “a crisis in their heads”.

“Our economy is currently growing at a rather fast rate. We do not have final data for the first quarter yet, but we anticipate a similar growth rate to that we had last year. Inflation is a problem not only for Lithuania and the European Union, it is a global problem.”

As the BNS wrote “There will be no economic recession in Lithuania. Our industry and our businesses operate really efficiently. There are certain challenges, but I would not call that a crisis. The opposition always sees a crisis. Most probably, there is a crisis in their heads.”

“Our nations (the Baltic states) need a soft landing in order to prevent an overheating of their economies. This is what is taking place now. We have somewhat smaller growth rates, which is normal.”

Lets have a look what the other financial institutions think about the status of the Lithuanian economy.

The IMF warned Lithuanians that the dependence of Lithuania’s banking sector on foreign financing coupled with increasing macroeconomic imbalances render it vulnerable to regional and global disturbances.

·        Existing capital might not be sufficient to cope with extreme events and higher buffers would be advisable.

·        Given limitations of lender-of-last-resort operations under the currency board, contingency planning for emergency liquidity support under crisis conditions should be further discussed with banks, parent banks, and authorities of foreign banks.

·        The dominance of foreign-owned banks in the banking system constitutes both a source of strength and a risk. Although the foreign banks are highly rated, these ownership linkages increase regional and global contagion risks, especially against the backdrop of the recent global turmoil in financial markets.

·        The loan portfolios of Lithuanian banks are sensitive to the domestic economic cycle and euro interest rates, particularly given the significant concentration in real estate-related lending.

Recommendations from the IMF

·        IMF also Lithuania to strengthen supervision in the non-bank financial sector, given the rapid growth of assets and the increasing sophistication of financial institutions.

·        The regulatory and enforcement framework for insider trading should also be reformed.

Lithuanian Free Market Institute

·        Lithuania is already on the ‘soft landing’ stage.  The GDP will grow by 6,6% this year

·        Lithuania’s cushion against the global recession is its low competitiveness and productivity.  We can increase the productivity applying simple solutions, at least in the short term.

·        Money for the new technologies and innovation will increase due to the rising wages

·        The wage rise will slow down, this year should be about 12%, to 1,779 LTL by the end of the year

·        The Black Economy will be on the rise again, from 17,8% to 18,5%.  The tax burden will increase from 31,9% to 40,9% in 2008.

·        Imports will decline

·        Lithuania is not too connected too strongly with the markets which experiencing the decline or stagnation.

·        Lithuanians borrowed from the banks relatively small amounts of money

·        The immigrants still transferring huge sums of money into Lithuania

·        The election campaign started already, some populist decisions accepted in Seimas and are already affecting the economy

SEB

·        Inflation should be 8,5%

·        Some signs of the ‘hard landing’, which will be more evident in the last two quarters

Danske Bank

·        The GDP around 5%

·        Inflation about 10% since increased heating prices will hit the Lithuanians hard

·        More troubles ahead since the Baltic economies ‘engine’ the exports will decline

·        If a bank (especially a Scandinavian) would collapse the consequences for the  Lithuanian economy could be catastrophic.  But a collapse of a Scandinavian Bank is almost impossible.  

               1.Iceland 

               3. Rumania

               4. Latvia

               7. Hungary

               8. Bulgaria

               9. Poland

 Ruslanas Iržikevičius - Lituanica
Vilnius, Lithuania

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