The latest study on the Lithuanian economy

In May LFMI released the latest study of the Lithuanian economy “A Survey of the Lithuanian Economy 2001-2002”, based on a survey of economists’ expectations. This Lithuanian-English study offers estimates of economic indicators for 2001 and forecasts for 2002, analysis thereof and comparison with official statistics and other sources. The study analyses GDP growth, the shadow economy, foreign trade, price changes, unemployment, the tax burden, earnings, household income, savings and investments, the profit margin, etc.

Market participants polled by LFMI see the Lithuanian economy growing and the financial situation of Lithuanian households and companies improving. They predict that these trends will remain through 2002. The Lithuanian economy will continue to grow at a similar rate as last year, by 4.4 percent. Rising domestic consumption, exports and investments will be the main factors of economic growth. However, the growth of Lithuania’s exports and imports is likely to decelerate due to the world’s economic slowdown.

This year prices are expected to rise faster than in 2001, by 3.3 percent; the official sources indicate a rise by 1.2 percent. The LFMI survey shows a sharp reduction in the tax burden in 2001, but the tax burden is expected to grow again and reach 38 percent of GDP this year. Although the informal economy has been steadily shrinking over the past years, market participants think that it will cease to contract and remain at the same level, 19 percent of GDP, in 2002 as a year before. The situation in the business sector will continue to improve, although not as fast as last year.

It is expected that Lithuania’s improving macroeconomic situation, a stable financial sector and successful EU membership negotiations will boost foreign investors’ confidence and injections in the Lithuanian economy.

LFMI analyses poverty issues

On May 30 2002 the Lithuanian Free Market Institute in co-operation with the United Nations Development Program held a conference “Explaining and Reducing Poverty in Lithuania: Prospects and Reality.” The goal of the conference was to present poverty prevention policy in Lithuania, to discuss the causes of poverty and to propose ways and measures for reducing it. The event drew around eighty participants from the President’s Office, the Ministry of Social Affairs and Labour, the Lithuanian Labour Exchange, Vilnius Municipality, UNDP, LFMI, various public organisations as well as business and media representatives.

In this issue of “The Free Market” we offer an excerpt from LFMI Vice President’s presentation at the conference.

LFMI presents its view on the future of Europe

On June 19 2002 the Lithuanian Free Market Institute, supported by European Commission Delegation in Lithuania PHARE Small Grants Programme, held a conference “Debate on the Future of Europe: a View from Lithuania.” The goal of the conference was to widely present LFMI’s position on major issues discussed at the European Convent as well as to stir up debates in Lithuania about the EU and Lithuania’s accession. The conference was also designed to join the on-going discussion about the future of Europe that is aimed at finding ways how to make the EU a more democratic and effective organisation which would better meet its citizens’ expectations. This conference was organised within the framework of LFMI’s project on the future of EU the goal of which is to develop a comprehensive study. It will present principles of, and recommendations for, reforming the EU and its institutions, dividing competencies among the EU and member-states, and drawing citizens into decision-making process of the EU. The study will be completed by the end of July, translated into English and disseminated widely.

LFMI’s President at a White House luncheon to honour M. Friedman

On May 9 2002 LFMI‘s President Ugnius Trumpa participated at a meeting “A Lifetime of Achievements: Milton Friedman at 90” held by the White House. To pay tribute to M. Friedman, U.S. President George Bush participated at the luncheon. As the “National Review” wrote, at the event President Bush spoke eloquently of Friedman’s influential ideas and devotion to liberty and emphasized the power of the free market to uplift not only economies but national securities and education. Among the speakers were Secretary of State Donald Rumsfeld, Chairman of FRB Alan Greenspan, NEC Director Larry Lindsey, Attorney General Edwin Meese, and Dr. Gary Becker. The event drew around one hundred participants from U.S. political, economic and academic circles and other countries. Mr. Trumpa took part in this honourable event at the invitation of the Heritage Foundation.