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Growth is projected to moderate but remain solid at just above 3% in 2018-19. Strong investment on the back of increased EU funds disbursements and growing business spending will support activity, mitigating the impact of skills shortages and a shrinking labour force. Underlying price pressures are set to continue, driven by buoyant demand and increasing wages as the economy operates above capacity.
The fiscal stance is poised to remain appropriately broadly neutral over the projection period. Budget measures to boost productivity and reduce high inequality and poverty, including increases in social benefits and tax incentives for innovation, are welcome. Making growth more inclusive further requires reducing informality and increasing the labour-market relevance of the education system to ensure appropriate skills. Effective activation schemes and upskilling, through lifelong learning programmes, would help job seekers to find new, quality jobs.
Economic Survey of Lithuania (survey page)