Monday, July 12, 2010

Lithuania's Adjustment

Lithuanian economy - IMF verdict;

Average gross earnings have fallen by 12.4 percent from pre-crisis peaks, but in sectors such as construction and real estate services, labor costs are down 20–25 percent. Unemployment had reached 18.1 percent by end Q1 2010, with high levels of youth and long-term unemployment an increasing concern....

Restoring fiscal sustainability and ensuring financial stability are the
authorities’ key economic objectives
. This supports the long standing currency board arrangement (CBA) and conditions for successful Euro adoption. The latter, would allow an orderly exit from the CBA, eliminate currency risks and reduce liquidity risk, a consideration
given the high degree of euroization (over 70 percent of bank assets but just one-third of deposits). Realizing the ambitious 2014 timeline for euro adoption will require addressing three key challenges: putting the public finances back on a sustainable footing, safeguarding
the health of the financial system, and rebalancing the economy towards tradables to fostermore balanced growth and job creation.

From Lithuania, a View of Austerity’s Costs
Burden-sharing in Lithuania

Bad Journalism At The Economist

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