Lithuania’s economy has already hit the bottom of the coronavirus-induced crisis and is expected to start recovery, the Finance Ministry said.
“Lithuania’s economy is very open, our situation depends a lot on how our exports are doing,” Finance Minister Vilius Šapoka told reporters while presenting the country’s macroeconomic report.
“We are seeing the first signs of recovery,” he added.
According to the Finance Ministry’s estimates, Lithuania’s GDP will contract 7 percent this year before growing 5.9 percent in 2021.
The economy is expected to reach its pre-coronavirus size in 2022.
“It is now critically important that we use tools to stimulate economic recovery and growth efficiently – by investing our public and EU funds rationally and effectively,” Šapoka was quoted in a press release.
The coronavirus has affected the labour market. Unemployment is expected to grow to 9.5 percent this year and inch down to 8.1 percent in 2021.
The crisis will also affect wage growth.
“Our forecasts see wages growing more slowly, but it [growth] will not be negative,” said Finance Vice Minister Miglė Tuskienė, adding that pay growth will be bigger in the public sector.
Average pay is expected to grow 1.8 percent this year – significantly slower than around 8 percent in 2019 . In 2021, wage growth may reach 3.3 percent.
Inflation is estimated to stand at 0.7 percent this year and 1.7 percent in 2021, according to the Finance Ministry.
The main sources of uncertainty for Lithuania’s economic outlook are export markets, according to the report. The possibility of a “hard” Brexit may have negative medium-term effects on the country’s economy.
In May, the Lithuanian government unveiled an economic stimulus plan totalling 6.3 billion euros.