On January 1st, 2015 Lithuania becomes the 19th country to join the Euro. As with many other things European, the people appear to be less enthusiastic than their leadership and according to the Economist ... the euro could also exacerbate one of the Lithuanian economy’s weaknesses. The country is one of the world’s most export-intensive, yet the productivity of Lithuania’s workers is one-third of the euro-zone average. Cheap labour helps to make its exports competitive. Yet real wages have grown by 5% this year, far above the euro zone’s rate of about 1%. Also The worry is that history will repeat itself. Lithuania may gradually lose competitiveness, just as Greece and Portugal did before the euro crisis. According to DNB, a bank, its current-account [foreign trade] deficit will hit 2% of GDP by 2016, a 3.5 percentage point deterioration from 2013. Euro-zone membership and the associated cheap debt may amplify the country’s weaknesses, not reduce them. economist/news/finance-and-economics/21635525-euro-zones-newest-member-faces-uphill-struggle-strange-bedfellows
Posted on: Fri, 26 Dec 2014 13:09:56 +0000
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