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GDP growth is projected to ease gradually as external demand momentum weakens and labour supply constraints bite. Investment will remain robust, albeit below current rates, supported by high capacity utilisation and the implementation of EU-funded projects. Strong wage growth, especially in the service sector, will support consumption but also put pressure on inflation. Informality contributes to inequalities.
After being mildly expansionary in 2018 owing to a package of structural reforms, the fiscal stance will become broadly neutral in 2019-20. The use of fiscal space for measures that boost productivity and reduce inequality and poverty is welcome. More simplified insolvency procedures would promote business dynamism. Tailoring skills closer to labour market needs and ensuring more effective activation programmes for job seekers would make the labour market more inclusive, enhancing well-being.
Source: OECD Economic Outlook 104 database; and European Central Bank.
Economic Survey of Lithuania (survey page)