Investor confidence in the Lithuanian economy reaches a three-year low

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The trust of foreign capital companies operating in Lithuania in the country’s business prospects have faltered this last quarter of the year and are at their lowest in three years. This was revealed by research on investors’ confidence in Lithuania performed by the association Investors’ Forum. The negative moods among investors were mostly due to the lack of political stability and continuing growth in the gap between wages and work efficiency, lrt.lt writes.

Based on the research performed regularly since 2014, investors' confidence in Lithuanian business prospects was 1.14 points on a scale of 2 this quarter. This metric was lower only in early 2015.

Investors' Forum chairman Rolandas Valiūnas comments that the situation is influenced by both events abroad and uncertainty in Lithuania. This ranges from trade wars, Brexit, continuing geopolitical tensions in East Europe, particularly illustrated by goings on in Ukraine to controversial statements and actions by the Lithuanian government and politicians.

"Today, with the world living in moods of a nearing recession, the country needs business and government to unite, needs clear political, social and economic priorities and well directed efforts to draw business to Lithuania," the chairman commented.

Around a third (34%) of the foreign capital business research respondents described Lithuania's political stability as low, many also being concerned by the increasing gap between work efficiency and wages with 23% viewing this as problematic and the respondents do not expect improvement here any time soon. An entire 39% believed political stability would deteriorate, while 41% - that the gap between wages and productivity would increase.

For four quarters in a row, investors note that the education system and its improvement should be the focus of the government. 66% of respondents hold this view.

Nevertheless, the investors' forum leaders note that the data does not necessarily mean that investors are disappointed in Lithuania, with more than two thirds (73%) of the business community viewing Lithuania as a country open to foreign investors. The country's main advantages are viewed as being IT, logistics and transport infrastructure, employee's capacity to apply foreign languages at work.

Despite scepticism of future prospects in the near term, investors remain ambitious, with 43% of respondents planning new hires in the coming quarter and 50% planning to maintain their staff numbers. Almost two thirds (64%) of investors intend to raise wages. Furthermore, 68% of companies expect the demand for their products and services to grow.

The research also inquired about the nearing dual citizenship referendum. 78% of respondents supported this initiative, but at the same time 84% noted that there is a lack of publically accessible information on it.

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