Investors’ Confidence Index for Lithuania (ICIL) for the first time in the history of this study reached a negative value – currently ICIL final value is 0,909 out of 2. The fact that the value of the index is less than 1 indicates that Lithuanian investors present more negatives assessments of the country’s investment climate than the positive ones. Naturally, the negative change is not unexpected in the current situation caused by a coronavirus pandemic. This decline was determined by a market and economic downturn and pessimistic prospects for the future.
Significant changes in investment climate valuation are seen in almost all areas: both in terms of the current business environment in Lithuania and expressing expectations about it in the future. Falling expectations of the country’s economy also affect investors’ plans to raise salaries, create new workplaces, and invest. The opinion of the investors also changed when evaluating the areas that need more attention from the Government.
The main reason why the index continues to fall is the negative change in valuation of sustainability of macroeconomic environment and ease of getting credit. Compared with the first quarter of this year, the number of investors claiming that the situation of macroeconomic stability is low, increased by 19 percentage points. Almost half of the investors (49 percent) believe that macroeconomic stability will decrease in the near future. Investors remain consistent when asked about telecommunications, transport and logistics infrastructure, and the foreign language skills of the employees. These areas were marked as the strongest advantages of the current business environment in Lithuania. Availability of suitable land/real estate or office space are also assessed more positively in this quarter.
Expectations about opportunities to create new workplaces, to increase salaries and invest are one of the main reasons why index decreased. 60 percent of the respondents believe that the demand of their companies’ products and capital investments will decrease in the near future. Managers are also cautious about other growth opportunities in their companies.
The ICIL study shows that the Government should pay more attention to the efficiency of the public sector and education. Also, investors still think that transparency and labor regulations should get more attention.
European investment attractiveness study by “EY” also shows negative changes in the assessment of business climate and future perspectives in Lithuania. Lithuania fell down by attraction of foreign direct investment (FDI) projects and Vilnius fell out of the list of the twenty most attractive European countries. According to the research, Lithuania attracted 60 FDI projects last year (83 projects in 2018) and is ranked 21st out of 47 European Countries.
Read the full report here.
Contact: Monika Gabalytė, Investors’ forum
[email protected] +370 5 2755258