WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

In Lithuania the new centre-left coalition government seems to have put into effect an appropriate policy-mix combining demand-side measures and growth-enhancing supply-side instruments. Rais-ing minimum wages has not increased consumer inflation; it has, however, bolstered household consumption, while investments in transport infrastructure have boosted prospects of growth in the medium term. At the same time, surprisingly high export growth has kept the current account deficit low. One of the dangers to economic growth and the current rebound in welfare after the bust is that the government might resort to austerity in order to aim at too early an accession to the euro area in 2015.