Foreign investors are slowly regaining confidence in the Lithuanian economy, although international and domestic political uncertainty dampen their hopes for effective solutions to old problems, a study shows.
The latest Investors' Confidence Index for Lithuania (ICIL), published regularly by Investors' Forum, an association of some 50 foreign-capital firms in the country, showed a slight improvement from the previous report in late 2018.
The principle issues identified by the investors include political stability, with 34 percent saying it caused some concern (a drop of 7 percentage points from the previous report) and 46 percent expecting the situation to get even worse.
Moreover, a third of the respondents, 34 percent, said they expected the gap between rising wages and productivity to increase.
The survey shows a slightly improving outlook among foreign-capital firms in Lithuania following a three-year low point in the fourth quarter of 2018, Investors’ Forum said in a press release.
“Although we do see positive change, investors' moods this year remain quite sombre,” according to Rolandas Valiūnas, board chairman of Investors' Forum.
The main factors of uncertainty include Brexit talks as well as Lithuania's approaching presidential election.
“The election season this year makes one look cautiously at any political initiatives and makes it unlikely that political forces will mobilise to solve old challenges, like inefficiency in the education system and the public sector. The study reflects it clearly,” Valiūnas added.
Education, migration and public sector efficiency are seen as the most pressing issues by foreign investors in Lithuania.
Seventy-seven percent of the respondents said the government should prioritise education, 52 percent thought migration procedures were too complicated and required reform, while 54 percent were unhappy about the performance of the country's public sector.
Almost a third said the government should dedicate more resources to boosting transparency and fighting the black market.
On the other hand, many investors said that Lithuania's well-developed infrastructure for telecommunications, transport and logistics gave the country a competitive edge.
The investors also commended Lithuanians' command of foreign languages, although rated it worse than in the last survey.
The survey suggests that foreign investors are optimistic about their businesses. As many as 77 percent are planning to give wage raises to their employees and four out of 10 said they would be hiring.
Investors' Forum publishes quarterly ICIL reports since 2014. The latest study was carried out in February and surveyed representatives from 56 foreign-capital firms operating in Lithuania.