Lithuania in 2008, predictions

January 2, 2008 at 9:46 pm Leave a comment

2008As the BNS reported the professional and amateur forecasters vying for the title of the Oracle of the Year 2008 established by the Verslo Zinios business daily see Lithuania’s economy growing in the range of 2.5-15 percent next year.The majority or 40 % of forecasters, which include economists, politicians and entrepreneurs, sees the country’s gross domestic product (GDP) growing by 6-6.99 % in 2008. Some 16 % project the growth of 4-5.99 %, another 16 % – 7-7.99 %, and yet another 16 % – by 8-9 %, the Verslo Zinios reports.

Some, however, are projecting the growth of 4.5 % or even 15 %.

About 28 % expect the annual inflation to reach 6-6.99 % next year, with another 28 % projecting the annual inflation of 8-9.99 % for 2008. Some 16 % of respondents believe that the inflation might breach the 10 % threshold and might reach as high as 11.5 %.

The forecasters also made projections as to which political party will take the power over in Lithuania in 2008, the year of parliamentary elections. Some 68 % of forecasters are projecting the election victory for Social Democratic party (LSDP) with Christian Democrats.

Nevertheless, as the BNS noted the potential forming of a coalition between Liberal Democrat Party led by impeached former Lithuanian President Rolandas Paksas together with Labour Party lead by Viktor Uspaskich, accused of corruption, following the fall parliamentary elections would put Lithuania in danger of a fiscal misbalance, the international credit rating agency Fitch Ratings warns.

The agency notes that having again chosen as leader the Russian-born Uspaskich, who had been in hiding from Lithuania’s judiciary system, the Labour Party could score one of the best positions in the parliamentary elections to take place in Oct. of next year. The prospects of Liberal Democrats are also assessed as considerably good as this party succeeded in municipal elections in February of this year, when they obtained the votes of almost 13 % of all the cast votes.

However, Fitch Ratings believes that the Social Democrat Gediminas Kirkilas’ led minority coalition is “likely to remain in power until scheduled parliamentary elections in 2008, as neither the Social Democrats nor the Conservatives would necessarily benefit from an early poll”, the report says.

According to the agency, “parliamentary elections are likely to yield another coalition government and Fitch believes another Social Democrat-led coalition is likely. However, the return to Lithuania from Russia of the founder of the Labour Party, Russian-born businessman Viktor Uspaskich, is a factor which could affect the outcome of parliamentary elections”.

Should the Social Democrats retain control over the Cabinet following the elections, and should Kirkilas win in the presidential elections in 2009, the agency notes that this “could lead to a weakening of the checks and balances in the Lithuanian political system”.

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Entry filed under: Baltic States, Economics, Lithuania, Northern Europe, Politics.

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