Lithuania's economy shows signs of overheating, no panic: head of central bank

Source: Xinhua| 2017-09-09 01:09:04|Editor: Mu Xuequan
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VILNIUS, Sept. 8 (Xinhua) -- The Lithuanian economy features some signs of overheating, however, the situation is different than before global financial crisis in 2007-2008, Vitas Vasiliauskas, chairman of Lithuania's central bank (LB) said on Friday.

He added that the eurozone is recovering more than expected and stronger euro contributes to balancing higher inflation in the single European currency block which Lithuania joined in 2015.

"The eurozone's figures were surprising; recovery, or to be precise, economic growth is stronger than expected," Vasiliauskas told reporters in a press conference in Vilnius held after European Central Bank (ECB) meeting a day earlier in Frankfurt.

"I believe we are in the upswing of the economy cycle rather than its peak; what should a cautious person do? He would think what should be done if there is some setback, he would think about some reserves," the head of the central bank added.

It is important to be ready for "difficult periods of time," Vasiliauskas underlined.

In his words, the current situation should not be compared to that of pre-global crisis a decade ago.

"There are some signs of overheating, however, we can't compare it to pre-crisis period as the fundamentals are different; this time the growth is not based just on borrowed money, public spending is under control," he underlined.

The annual inflation in Lithuania amounted to 4.1 percent in July, however, the head of the central bank expects the indicator to recede to 2.2 percent next year.

"The main reason behind higher inflation is the increase in wages which amounted to 8-9 percent in recent years," Vasiliauskas noted.

Lithuania's GDP increased by 4 percent in the second quarter this year, the country's official statistical office said earlier this month.

Lithuania's central bank expects the country's economy to advance by 3.3 percent this year.