Analytics, Baltic States – CIS, Economics, EU – Baltic States, Financial Services, Lithuania

Businesses would find it much easier it cope with the consequences of the Russian recession and sanctions if the eurozone had a solid foundation, which is not the case now. Lithuania will soon be using a new currency, yet, in the first years it will not be able to reveal all of its advantages and will not guarantee a rise in the subsistence level.

"The euro is like a pair of new shoes which at first are uncomfortable and hurt us, but eventually we break them in and they become irreplaceable," said Gitanas Nauseda, advisor to the SEB bank president.

According to Nauseda, the biggest unknown factor is the psychological expectations in Lithuania which may have both rational and irrational nature. "Businesses and households do not live in some kind of vacuum, on the contrary, they face with a massive information overflow on a daily basis which they evaluate through the filter of their subjective perceptions," the economist said.

Lately, geopolitical conflicts, real and potential aggression cases dominate the media which in turn contributes to rising tensions and make people postpone their riskier consumption and investment decisions for some time in the future. However, according to Nauseda, the current situation cannot be compared to 2008 when the entire global financial system was paralysed.

Taking into account the latest macroeconomic trends, SEB has decreased the GDP growth forecast for 2015 from 3.2% to 2.6% and for 2016 from 4% to 3.5%.

At the same time, the consumer price inflation is expected to slow down: in 2015 – 0.4%, in 2016 – 0.7% (previously, the forecast was 0.7% and 1% respectively).

The predicted average pay increase in 2015 was reduced from 5% to 4.2% and in 2016 from 5.5% to 4.8%.