Friday, 27 June 2008

Economic Review

A review of some recent articles about the economy in this part of the world. I'll just translate selected parts of each article.

DnB Nord: We Live Half as Well as the Richest EU Countries

The highest standard of living in the European Union can be found in Denmark ... and its standard of living is twice that of Lithuania. Growing at the same tempo it did last year, Estonia could catch up with Denmark in about 2020, and Lithuania and Latvia would require another three to five years.

If our country does not make the adjustments that are needed, however, it could, according to its rate of growth, become an outsider among its neighbors.

These comments were made on 12 June by DnB Nord Bank chief analyst Rimantas Rudzkis when he was presenting the bank's economic review of the six Baltic Sea countries.

"No one believes that the economies of Lithuania, Latvia or Estonia will hit rock bottom. The talk is about a loss in tempo", the analyst emphasized.

He said the the inactivity of the government could cause Lithuania to become an outsider compared to Latvia, Estonia and Poland since, for example, the reform of the educational system in Estonia took place long ago, the labor market is more flexible, and the taxation system is simpler, not only in Estonia, but also in Latvia.

"If the business and investment climate here doesn't get better, we are in danger of becoming outsiders. These problems in Lithuania have been brewing for quite some time, but nothing is changing. Most likely Prof. Kestutis Glaveckas was correct when he said that it would take a crisis for us to start solving such problems", Rudzkis said.

He admitted that the political situation in Lithuania is not favorable since no one political party has a solid majority.

"It seems to me that investors from the West probably think that our conflicts with our neighbors to the east are troubling. Investors are not interested in ideologies. They are interested in earnings and they go to those countries that get along better with such a market as Russia", the analyst added.

The article continues...

And another article:

World Bank: Baltic Countries Are Dealing Well with Crisis

According to a report (the EU10 Regular Economic Report) prepared by the World Bank, the ten former communist countries that are now members of the European Union are adapting fairly well to the slowdown in the global economy...

And another article:

Dalia Grybauskaite: It Is Necessary to Forget Cheap Fuel and Food

European Commissioner Dalia Grybauskaite continues to call the activities of the Lithuanian cabinet of ministers "a feast in a time of famine" that is only getting bigger as time goes on. She says that the government is not properly fighting rising food and fuel prices, and in place of negotiations about keeping the Ignalina Nuclear Power Plant open for a longer period of time, only technical consultations are taking place.

"For a country that wants to introduce the euro, Lithuania looks bad and is going to look even worse."

"There is always a way out. Only competence and political will is needed", Dalia Grybauskaite, the European commissioner for financial programming and the budget [from Lithuania], said to journalists on 20 June...

The rest of the article goes on to say that she thinks both those things (competence and political will) are missing. The prime minister didn't take kindly to her criticism and said her criticism was harmful to the country and accused her of politicking (Kirkilas: Grybauskaite's Criticism of the Government Is Harmful to Lithuania). In turn, Grybauskaite said that she was only passing on the opinion of the European Commission (Grybauskaite: Criticism of Lithuania Is Official Opinion of European Commission).

I haven't begun stockpiling food and weapons yet (would probably need to move to the United States to do such a thing), but I have a feeling that things could get quite bad and no matter what will certainly get worse before they get better.

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