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International Internet Magazine. Baltic States news & analytics Saturday, 30.05.2020, 22:05

Global and Lithuania’s economic development accelerating, but growth impact not to be felt by everyone due to income inequality

Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, 21.04.2017.Print version
Growing inequality in income and opportunities is an issue that is especially relevant to us as well. While we are reasonably excited at the economy’s recovery and growth, the gap between the richest households and those with the lowest income continues to be unjustifiably large; hence, people’s feelings about economic growth vary, and not everyone’s quality of life has been improving.

The unjustifiable income gap leads to painful social implications that may be long-lasting; it is therefore necessary, in formulating and implementing modern taxation and social policies, for our focus to be targeted on namely the reduction of social exclusion.

IMF experts note the correlation between growing inequality within countries and spreading protectionist sentiment.

Protectionist sentiment arising in advanced economies is raising major concerns, as globalism has contributed to economic growth and a decrease in poverty in the world. The IMF should continue supporting ideas of a global economy, thereby bringing together the efforts of countries to immediately deal with the income inequality issue and support these efforts with relevant analytical materials and expert evaluation.

In assessing the outlook for the global economy, the IMF indicates that this year the pace of economic development will accelerate compared to a year ago – both in advanced economies and developing countries. However, the IMF emphasises that certain structural issues, such as adverse demographic trends, weakening labour productivity in advanced economies, continue hindering the pace of economic growth.

Compared to the IMF’s autumn forecast, the forecast for Lithuania’s economic growth has been revised slightly downwards – to 2.8 per cent (from previously 3%), but the IMF still expects our economy to grow stronger than last year. The IMF also expects the unemployment rate in Lithuania to gradually decrease further.

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