More than half of the survey respondents said they are confident that the crisis will grow more severe in the near future and the financial situation will only worsen.
“When people expect the situation to worsen, the deterioration does happen because, in economics, consumption is linked to the consumers’ expectations. Many people have already come to feel a worsening of the situation, just that it is not critical and most still have sufficient funds for their basic needs,” Ignas Zokas, the head of the company Spinter Tyrimai, said.
Two fifths (38%) of respondents indicated they had faced material and financial losses, as well as markedly reduced incomes.
Nearest plans to borrow near nil
Half of the households participating in the study indicated that they have only one source of income. In 7 of 10 cases, the source of income is a wage. Only every tenth Lithuanian citizen is thinking that the financial situation will improve over the coming three month period.
“As such, it comes as no surprise that almost all respondents – an entire 95% of them – stated they have no plans to borrow money in the near future. This dispels the myth about how banks should be granted more leeway, they will lend money for consumption and this will kickstart the economy,” Alliance of Lithuanian Consumer Organisations (LVOA) vice president Kęstutis Kupšys says.
Every fourth Lithuanian indicated they have long term financial commitments with banks. Almost all of those with debt indicated they know that if they face financial difficulty, for example, if they lose their jobs or a vast part of their income, they can appeal at the credit-issuing institution and request a “credit holiday.” A third of the indebted are planning to request loan repayment postponement. Some 32% of respondents answered as “very likely” or “somewhat likely” when asked the question “How likely is it that if you face potential financial difficulties over the coming three months, will you appeal to the credit-issuing institution for the postponement of your loan/credit repayment?”
For many, the three months of standard “credit holiday” would not suffice. Lithuanian citizens, who hold debt, would instead choose a no shorter than 6-month postponement – this or an even longer duration was indicated by 62% of respondents, who currently hold loans.
Moods influenced by uncertainty
According to Ignas Zokas, the poor mood of the Lithuanian citizens is caused more by uncertainty than by the significantly deteriorating financial situation.
“Currently, it is a state of vast uncertainty – fear and the understanding that the situation is deteriorating, but no one knows yet, just how deep and long the fall will be. If the economic situation can be reined in quite quickly (on a global scale, not in Lithuania), then expectations could rapidly shift, and moods begin to recover quickly,” I. Zokas predicts.
According to K. Kupšys, faster government responses in establishing a firmer foundation to stand on for the poorest and reliant on a sole income source families could reduce the feeling of uncertainty. “A financial cushion along the lines of the recently promised 200 euro for the elderly and other supported social groups should reach all impoverished homes as soon as possible. This way, it can be expected that the uncertainty and fear, which grips families, will be replaced by at least a cautious optimism that the worst is already in the past,” he says.
The survey was performed by the market research company Spinter Tyrimai on April 20-30, 2020, using a combined research method – 50% CATI (Computer-assisted telephone interviewing) and 50% CAWI (Computer-assisted web interview). The survey spanned 1011 Lithuanian citizens aged 18 to 75. The survey aimed at uncovering how the financial circumstances of the country‘s citizens changed due to COVID-19, the long term financial commitments they hold and they behaviours when facing financial difficulty while holding long term financial commitments. The survey was commissioned by two Lithuanian “umbrella” NGOs – the National Network of Poverty Reduction Organisations and the Alliance of Lithuanian Consumer Organisations (LVOA). The Alliance is very thankful to the European Consumer Organisation BEUC, which offered support, partly covering the survey expenses.
About the Alliance of Lithuanian Consumer Organisations
The Alliance of Lithuanian Consumer Organisations is an alliance of ten non-governmental consumer organisations, which has been operating since 2012. The Alliance is the only umbrella organisation in Lithuania representing consumers that is a member of the European Consumer Organisation BEUC. The Alliance’s activists act on the EU level, participating in expert groups formed by European institutions (the European Commission, directorates, agencies), the European Economic and Social Committee, the European Consumer Consultative Group and BEUC workgroups. The LVOA’s identification number in the European Union Transparency Register: 506497923503-90. Find out more about the LVOA at www.lvoa.lt
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