bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 25.06.2017 | Name days: Maiga, Milija
LithuaniaLithuania

Trump presidency and EU ballots among exterior factors to shape Lithuania’s life in 2017

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Linas Jegelevičius for the BNN

Four economy luminaries have opined this week on looming threats to Lithuania and its national economy in the months to come. Despite disagreements on the tack a new «peasants»-orchestrated government is about to take, leading economists have firmly concurred on a couple of developments.

Current events were commented on by Žygimantas Mauricas, chief economist of Nordea Bank Lietuva, Jekaterina Rojaka, chief economist and of Economic Research Department at DNB Bank, Rokas Grajauskas, chief economist for the Baltic region and Danske Bank, and Gitanas Nausėda, chief economist at SEB Lietuva Bank and a sought-after guest at many premier TV forums.

Donald Tump presidency a major factor

First, the prospects of Lithuania, as well as the world, are very much hinged on the course to be taken by Donald Trump, the U.S. president-elect, and, domestically, a slew of economic developments are to be watched out.

For Rojaka, the nervous geopolitical situation creates imminent menace that might spiral out of control.

«As it (situation) is hardly predictable and manageable, it entails exterior shock. Today, a big risk also arises from China, I mean in terms of money politics changes and also because of the geopolitical influence,» the pundit prognosticated.

Some of the aftermaths of a rapidly changing political landscape, she believes, Lithuania will start feeling already next year.

«We are awaiting in early December Italy’s referendum on constitutional reform, then, next year, we have the development-determining votes in France, Germany and elsewhere,» she said.

Crucial ballots for Europe

Italy’s referendum for constitutional reform is due to take place on December 4 and proposes streamlining the legislative process by decreasing the power of the country’s second chamber, its senate. Italian Prime Minister Matteo Renzi has threatened to resign if the amendment proponents prevail.

It is feared that with Italy voting «yes» the pressure to pursue similar reforms will likely roll on the other European countries, which also may seek to put many until now unquestionable things on ballot.

The baton of change, almost surely, will be passed onto France, with its presidential election due to take place in April next year.

Although Lithuania has not sensed any tangible fallout from Brexit, it, however, can come in 2017, believes Rojaka.

«In European and international waters, we (Lithuania) are like a tiny boat in a tempestuous sea, where our success depends on several things – right balancing, flexibility and a smart shipmaster,» Rojaka drew a comparison.

She is convinced Lithuania will likely deal with a significant political risk next year.

«It is urgent that business and authority retain the ties (amid a possible political risk). Having a right investment environment is as much important…If something does not work there, the business expectations will worsen,» Rojaka cautioned.

Many issues await incoming PM

Echoing the incoming Lithuanian government’s education concerns, the economist also singled them out, as well as necessity to invest into workforce skills improvement and bolstering immigration politics.

Lithuania’s President Dalia Grybauskaitė has appointed Saulius Skvernelis past Tuesday as the country’s new prime minister.

The head-of-state authorized Skvernelis to form a new government within 15 days and submit its line-up for approval.

During the voting on the parliamentary floor, the candidature of the 46-year-old former police chief and interior minister was endorsed with 90 MPs voting for him, four against and with 33 abstentions.

Little work efficiency

Meanwhile, Grajauskas, of Danske Bank, accentuated issues stemming from little work efficiency.

«Alas, our productivity growth falls behind the wage growth more and more. When it happens, then the export starts skidding because companies are forced to increase their commodity prices, which backfires in the consumers’ declining ability to buy the goods. This is a big issue for Lithuania since export has been the engine of our economy and we are still much reliable on it,» the economist emphasised.

In his words, work efficiency in Lithuania grows only 1-2 per cent yearly, which is just too little compared to the upping wages.

«The wages are growing very rapidly and there are not any reasons why they should slow down. However, there’s shortage of workforce – demand for it is rising but there is no supply,» Grajauskas noted.

As Rojaka, he suggests the new government to invest into education.

«We ought to focus on education quality, not quantity. Lithuania fails to attract talents. We ought to attract young people from abroad, specifically from Ukraine, Belarus and Georgia, so they could start their business here,» the economist reasoned.

Invest in people, not only in manufacturing

Addressing to Lithuanian businessmen, he called on them to invest more in people, not only in their manufacturing facilities and equipment.

«We should exert our efforts in expanding the chain of value creation, I mean in terms of marketing and solidifying the brand. As a nation, we are lagging too much (in that regard), as we are focused too much on the product creation. If we were working in that direction along with universities, we could see a breakthrough in the field,» Grajauskas predicted.

Meanwhile, Gitanas Nausėda, the chief economist of SEB Lietuva Bank, believes that the Donald Trump presidency bodes a lot of indefiniteness.

«It constitutes the largest risk both to the world and Lithuania, too. The presidency-related anxiety can lead to a big investment drought, a result of the unpredictability as to what to expect from the new US authority,» Nausėda underscored.

He predicts that Lithuanian market, in 2017, will be competitive as never before.

«It will be marked with workforce shortage, which will lead to an abrupt hike in its costs,» the SEB Lietuva banker concluded.

Emphasising that traditional markets will not bring «much joy» to Lithuania in 2017, he called on Lithuanian businessmen to look for new ones.

Redundant state workers have to go

Nausėda also believes that Lithuania should downsize the apparatus of local municipalities and government.

«The reduction should be in the range of 30 per cent. As people continue leaving the country, the number of municipal employees goes up,» he noted.

Meanwhile, Žygimantas Mauricas, of Nordea Bank Lietuva, believes that the biggest challenge is within…Lithuanians themselves.

«We are just a mere reflection of the state…We need to think of what kind of a state we are creating and what kind of a state we would like to see,» the economy pundit said.

Another major challenge Lithuania faces is tax evasion and, therefore, the state’s inability to collect taxes.

«In the light of our determination to keep free education and other free services, the situation is really bad…The employers do not want to pay higher wages to people toiling in public sector because they do not believe that the quality of public services can improve,» Mauricas emphasised.

He says it is worth to give a thought on handing over part of public services to private business and alleviate thus the state’s tax burden.

Emigration tops all issues

On top of the hot-button problems is emigration, all the economists agreed.

«Lithuania can still offer a very low pay. I suggest decreasing the taxable level of income, so that the workers can pocket at least a thousand euros by 2020. If the wages do not go up, then we will see even larger emigration,» Mauricas predicted. He added: «Lithuania is in race with the time, and reforms have to be done now. Otherwise we risk to get stuck in the vicious circle of emigration and poverty.»

Ref: 020/111.111.103.4445


Leave a reply

Real estate purchase «pain threshold» in Latvia – EUR 100,000

In relation to the possibility of purchasing a new home, Latvian residents view EUR 100,000 as the «pain threshold». The critical border for new project apartments is 1,300 EUR/m2. For standard apartments it is 1,000 EUR/m2. For private homes it is 1,600 EUR/m2, according to results of a study by PrivatBank.

Lembergs & Co. gathered to discuss «problems» of the high and mighty

Political businessman Ainars Slesers held a friendly discussion with his associates – Aivars Lembergs, Andris Ameriks, Janis Urbanovics, Janis Duklavs and Valerijs Kargins – at Ridzene Hotel. The group discussed toppling Valdis Dombrovskis’ government, replacement of multiple high-ranking officials and the possible sale of pieces of land within Riga Freeport’s territory, according to transcripts from the conversation published by Ir magazine and provided by anonymous sources.

Lithuania set to limit cash payments to 3,000 euros

The Farmers and Peasants-led Lithuanian Cabinet has approved a draft bill envisioning restrictions on use of cash, limiting the kind of settlements up to 3,000 euro.

Saeima establishes indexation increase for pensioners with high seniority

On Thursday, 22 June, Latvia’s Saeima approved Social and Employment Matters Committee’s prepared amendments to the Pension Law in two readings, ensuring greater pension indexation for multiple pensioner groups next year.

Romanian Parliament ousts Grindeanu government

The Romanian government of Prime Minister Sorin Grindeanu has not survived a no-confidence vote and has fallen after less than six months in power.

Rail Baltica agreement will allow trains to travel at 240 km/h

Saeima of the Republic of Latvia will soon ratify Rail Baltica agreement, which is expected to allow passenger trains to travel at a speed of 240 km/h instead of 120 km/h. Higher travel speed will also ensure cargoes from Tallinn reach Poland within two days.

Mamikins: Latvia is becoming a landfill for rich European countries

A very large fire took place at an illegal landfill in Jurmala this week. According to information from the State Environmental Protection service, the fire had engulfed 23 tonnes of waste, mainly plastic waste, says Latvian MEP Andrejs Mamikins.

Latvian businessmen use e-commerce opportunities for business development

With e-commerce volumes growing around the world, Latvian businessmen use it more and more often for business development, including exports of goods and services. As noted by DPD, the number of packages sent to foreign countries grew 22% last year.

Latvia wishes to change its state president’s election process

Reviewing proposals to change the state president’s election process, Saeima’s Legal Affairs Committee decided to submit proposals developed by the work group to different Saeima factions for review, as BNN was informed by Saeima’s press-service.

Coalition parties close to making final decision with tax reform; no more obstacles

Coalition parties no longer have any more differences of opinions in regards to tax reform principles. Parties are close to making the final decision, said Economy Minister Arvils Aseradens after the meeting with Finance Minister Dana Reizniece-Ozola.

Saeima plans to introduce personalized voter cards

For next year’s Saeima elections, voters who only have an ID card and no valid passport are planned to be provided with personalized voter cards.

Producer price level in industry up 0.4% in Latvia

Compared to April, the level of producer prices in Latvian industry grew by 0.4 % in May 2017. The prices of products sold on the domestic market increased by 0.3 %, whereas the prices of exported products grew by 0.5 %. The prices of products exported to euro area countries grew by 0.8 % and of products exported to non-euro area countries – by 0.4 %.

Opinion: local media in Daugavpils are corrupt

«Now that we constantly face new and more elaborate security risks, concerns tend to increase about the fight for people’s minds in the information space. This is why the bar for professional journalists should be held high. Baltic Centre for Media Excellence plays an important role in all this,» said chairman of Saeima’s Foreign Affairs Committee Ojars Eriks Kalnins after the meeting.

Life in Riga remains more expensive than life in Vilnius and Tallinn

Riga is recognized as 126th most expensive city in the world. Life in the Latvian capital is considerably more expensive than it is in Vilnius or Tallinn, according to a study published by *Mercer Human Resource Consulting.

Most universities in Estonia to cut number of new students this year

Three of the four universities working in Estonia have expressed plans to bring down the number of admissions in the coming academic year.

Foreign investors do not support amendments proposed for Financial Instruments Market

The Foreign Investors Council in Latvia does not support proposals for protection of rights of minority shareholders, which are include and proposed in amendments to the Law on the Financial Instruments Market.

Ligo celebration causes condom sales to go up in Latvia

Nearly 39% Latvian residents plan to spend around 21 to 40 euros on Ligo, according to results of a survey performed by Maxima. 22% of respondents plan to spend around 20 euros on the celebration. 22% of residents plan to spend 41 to 60 euros, and 17% - more than 61 euros.

Latvian government asked to compensate profits lost from rejecting Nord Stream 2

Considering the stance of the Latvian Republic in relation to Nord Stream 2 project, in which the Cabinet of Ministers decided not to permit the participation of Ventspils Freeport, Noord Natie Ventspils Terminal and Baltic Express have decided to ask the government to compensate lost profits. An official request has been submitted to the prime ministers.

Hospital: countryside residents with no easy access to a urologist are at risk

For the third consecutive year urologists from Riga Eastern Clinical University Hospital’s travel to Latvia’s far-away regions to provide men there with free health check-ups and consultations. This year urologists decided to visit Dobele, Cesis, Rezekne and Jekabpils.

Stoltenberg visits Iron Wolf exercises in Lithuania

NATO Secretary General Jens Stoltenberg has visited Lithuania on Tuesday, June 20, to see international military drill Iron Wolf 2017 and has noted that the involved countries are protecting each other.

German Chancellor could support introducing eurozone budget for sensible purposes

Angela Merkel, the Chancellor of Germany, has stated that she could support the introduction of a separate eurozone budget and a position of an eurozone finance minister, in case of right circumstances and sensible aims.

Prosecutor decides to end criminal case against former KNAB officer Juris Jurass

In spite of the decision by Security Police to present charges, the prosecutor responsible for the case has decided to end the criminal process commenced against the now former official of Corruption Prevention and Combating Bureau Juris Jurass for intentional disclosure of official secrets.

Latvia wants to introduce electronic working time tracking in construction

Saeima’s Budget and Finance Commission has expressed unanimous conceptual support for amendments to the Law on Taxes and Duties. These amendments provide for the introduction of electronic working time tracking system in construction, as BNN was informed by Saeima’s press-service.

Alleged bomber shot in Brussels central station

In the central station of Brussels, Belgium, soldiers have shot a man suspected he was to detonate explosives, local authorities have stated. The man was shot and later died after reportedly setting off a small explosion on Tuesday, June 20, and no-one else is believed to have been injured.

Expert: pension capital grows, but the Latvia still has a ways to go

«Latvia’s pension system has been named one of the best in the world multiple times. Pension capital in it has grown rapidly over the years. The volume of savings gathered on the 2nd level pension system by the end of Q1 2017 came close to EUR 3 billion. The volume saved on the 3rd level pension system was close to EUR 4 billion,» explains Nordea Pensions Latvia board member Ilja Arefjevs.

Newest comments