Download Euro zonos ekonomika pirmąjį 2010 metų ketvirtį augo 0,2 proc

LITHUANIAN ECONOMY CHANGES OF THE EU COUNTRIES IN THE CONTEXT OF
REVIEW
2010 June
Summary
The summary shall contain the world, the EU member states and the Lithuanian
economy as their main analysis of the indicators. The euro-zone economic indicators,
statistical analysis are based on Eurostat database. Lithuanian economic indicators further
comment on corporate VAT returns available data.
European Union's statistical office announced the euro zone economy in the first
quarter of 2010 increased by 0.2 percent. Compared to the same period last year, the euro zone
economy increased by 0.5 percent. The increase in the quarter, compared with the previous
quarter, was also 0.2 percent. And the economy increases annually by 0.3 percent.
The EU's economic decline has stabilized in 2009 in the third quarter, mainly due to
the anti- crisis measures, which were taken in accordance with the European Recovery Plan,
and also due to a number of other temporary measures.
However, the resurgent optimism of the slight decrease comes down in the publication
of general knowledge about business and consumer confidence index for the euro area
economy after the unexpected decline in May.
The Confidence Index, which calculates the European Commission, fell from 100.6
points in April to 98.4 points in May, although the analysts predicted that the index would
remain unchanged during the month. According to the experts, the Greek debt crisis could
slow economic recovery in the euro area. Because of the decline of the euro exchange rate, the
exports price decreased by euro area but imports prices increased. On the other hand, weak
euro is useful to the exports and beneficial to the producers doing great. Therefore the
confidence of the consumer, retailer and service companies in the euro zone economy
weakened in May, industrial sector confidence index grew from minus 7 to minus 6 points.
The business activity in the euro area industrial sector grew in April - it is the biggest
growth since June 2000.The activity in the euro area industrial sector index this month jumped
from 55.9 points in March to 57.3 points in April.
The index increase over 50 points in limit means that the industry is growing. The
European Commission's quarterly report on the situation in the euro zone stated that the
economic crisis had revealed major imbalances and increasing of the competitiveness between
16 euro area member states. The Commission also warned that the recovering economy was
accompanied by risks, especially for the growing unemployment. It also was argued that the
euro-area countries, in order to avoid imbalances in the future, had to strengthen economic
cooperation and to undertake the reforms to reduce the Member States' competitiveness.
It is obvious that if the European Union will not take immediate effective measures to
restore the country's economy post-crisis period, the United States and Asian countries, where
this process is accelerated , may push the EU into the background of the world economic
policies.
The European Commission and the IMF recommended to coordinate the economic
policy at EU level. In assessing the current state government and the international supervision
of staff activities in the fight against the global crisis, the IMF notes, that the collaborative
work is inconsistent. The latter is confirmed by the lack of the cooperation and coordination
in decision-making as well as slowing down the pace of the global economic recovery.
However, the biggest problem of the world economy raises is the debt crisis. Weak
public finances could undermine not only in Greece, but also in many other European
countries.
To create a new Pan- European management procedures, which would seek to prevent
the growth of debt, and secure of the region's financial stability and economic recovery, the
European Commission has prepared a package of measures. The European Commission
proposes to revise the European Union Member States 'governments' budgets before
submitting them to national Parliaments. The Commission also suggests that the euro-zone
countries, which block the breach of the rules regarding the permissible deficit and debt level
would be frozen EU subsidies and financing. Member States may also be forced to put up
deposits, which are the subject to interest if it is decided that the progress towards the
medium-term budgetary objective periods of growth is insufficient. Under the deposit system,
the national governments will have to take care of the savings that could be used to improve
their financial situation, if suddenly it will be disadvantaged.
The recent Lithuanian labor market indicators reaffirmed that there is no improvement
in the first quarter this year. Average monthly gross wages and salaries, compared with a
fourth Q in 2009, decreased up to 4.1 percent and during the year fell up to 7.4 percent. The
high and unabated unemployment remains persistently and leaves more room for wage
adjustments. In the first quarter the private sector wages reduced 1.5 times more than the
public sector.
It creates the impression that Lithuanian real sector‘s reaction to economic change is
much sharper and faster than in other Baltic countries, and recovery process is more slow. The
domestic consumption is not recovering, but it is too falling. The corporate investment is still
low. The majority of the companies are not going to increase the number of employees. The
weak domestic demand restricts the economic recovery.
At a time when European governments were encouraged to make every effort to
stabilizing the financial sector and the measures were not be so fragile for economic recovery,
Lithuania went the opposite way. Instead of a fiscal and effective economic stimulus
consumption taxes were substantially increased, drastic social benefits were cropped, which
dealt a further blow to the domestic consumption and further deepened sufficiently the weak
economic downturn.
To reduce the country's deficit over the next two years the government is planning to
cut the public spending another 1.5 billion. They want to declare the year 2012 the country's
fiscal deficit as much as 3 percent. GDP, the difference between income and expenditure
should be reduced by slightly more than 4.5 billion lt. They also hope to get most of the
money for deficit reduction from the introduction of the new taxes and cutting the social
benefits.
Meanwhile, the Lithuanian President Dalia Grybauskaite thinks that the government
should first reduce the black economy, and only then think about the tax increases.
It is obvious that without strong and efficient economic stimulus measures the
Lithuanian recovery path is very long.