Geopolitical risk is affecting stability of world’s economy – Bank of Lithuania head

Vitas Vasiliauskas
DELFI / Tomas Vinickas

“We will know the final data in the near future; however we do not expect any pleasant surprises: the prior assessments by experts show that the global economic performance indicators will most likely be poorer than expected and there will be less optimism than at the beginning of the year,” said Vasiliauskas.

According to him, global economic expansion is still uneven, economic recovery and further development is hindered by still-subdued investment, especially in advanced economies. The economic development prospects are worsened by geopolitical and related economic risk.

“Geopolitical tension is definitely not the problem of separate regions, but high-impact factors that affect both the real economy and financial sector, and economic expectations,” said the head of the Bank of Lithuania. According to him, it is necessary to constantly monitor the geopolitical risk that has been strengthening since spring and responsibly access it and act prudently.

Vasiliauskas also emphasised that “we are at the point where not just one factor can have a negative effect on the economy, but a whole complex of adverse circumstances. This is why now, more than ever, a composite and well-coordinated response is necessary both at the national and international levels.”

According to him, although the accommodative monetary policy of central banks significantly adds to economic recovery, structural changes are necessary for solving current economic issues. Therefore, in the upcoming years, the IMF will have to pay even more attention to structural reforms, ensuring that they would be implemented in the countries belonging to the organisation.

According to the head of the Bank of Lithuania, the history of the IMF, especially recent years, showed that this organisation, as well as its members are able to react to changing circumstances; therefore we have reason to believe that the reaction to the recent challenges will be adequate.

During his visit in Washington, Vasiliauskas will participate in the meetings of the IMF’s International Monetary and Financial Committee as well as meetings of the Nordic-Baltic constituency. Meetings are also planned with heads of the US Central Bank – the Federal Reserve System – and the IMF’s European Department.

The Chairman of the Board of the Bank of Lithuania, Vitas Vasiliauskas, is a member of the Governing Board of the IMF.

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