Best EU economy in year of Covid was bloc’s worst-hit after 2008

The European Union’s worst-hit financial system within the wake of the worldwide monetary disaster is wanting just like the bloc’s least affected throughout the coronavirus pandemic.

Lithuania suffered the deepest recession in 2009 because it turned a testing floor for the tough austerity that later ravaged Greece. This time, the European Commission reckons it would notch the shallowest contraction of all, with forecasts this month pointing to a dip in gross home product of simply 2.2%.

In some methods, the Baltic nation of two.eight million individuals obtained fortunate: its financial system doesn’t depend on vacationers, farmers loved a bumper harvest and logistics firms benefited as consumers throughout the continent ramped up on-line purchases. But the federal government and corporations additionally realized classes from the final crash, and have been much more prudent within the runup to this one.

What’s extra, Lithuania was lightening fast to reply to the virus’s first wave, imposing a lockdown with solely seven confirmed instances of Covid-19 within the nation to make it one Europe’s least-affected.

“Victories on the health front helped the fast economic turnaround,” mentioned Indre Genyte-Geciene, chief economist at INVL Asset Management in Vilnius. “Businesses had also had a string of successful years. They were at the peak of economic cycle, with large financial buffers that helped them survive.”

That cushion was seen in state coffers too. Unlike the chaos after 2008, when Lithuania flirted with a bailout, noticed staff flee westward and wanted drastic spending cuts to remain afloat and undertake the euro, Prime Minister Saulius Skvernelis struck a reassuring tone when asserting March’s lockdown.

“There’s no issue with finances — the state has enough funds accumulated,” he mentioned in a televised deal with. Consumers took coronary heart: Retail gross sales returned to pre-lockdown ranges after simply two months.

Indeed, years of finances surpluses noticed Lithuania’s credit standing lifted to the identical stage as Japan’s. The authorities was capable of present a furlough program, delay company tax funds and subsidize self-employed staff. And with out issues like a nationwide airline to rescue, costly bailouts weren’t wanted.

Many industries, quite the opposite, thrived. Lithuania has the EU’s fourth-smallest share of sectors in danger from pandemic-related ache, whereas good climate helped it export the bloc’s second-highest quantity of wheat this 12 months.

A spike in demand for on-line providers handed info and communications expertise firms a second-quarter gross sales soar of just about 50%. Then there’s transportation.

Girteka Logistics, which owns Europe’s largest fleet of vans and does 98% of its enterprise overseas, noticed cargo volumes climb as e-commerce surged.

“While Europeans stay at home to slow the coronavirus, Lithuanian trucking companies continue transporting essentials like consumer goods, food and pharmaceuticals for home consumption,” mentioned Kristian Kaas Mortensen, Girteka’s director for strategic partnerships.

Despite a second virus wave inflicting larger injury than the primary, he says the nation’s prepared, having endured a lot worse a decade in the past.

“In Lithuania, we don’t cry,” Mortensen mentioned. “Nobody’s afraid of a crisis. Everyone’s like, ‘yeah, we’ve been there, seen that. Whatever, let’s do it.’”