Poll: uncertainty leads Lithuanians to halt their plans to consume and take out loans
A “Spinter Tyrimai” survey of Lithuanian residents performed in April on the current financial situation has revealed that citizens are not planning any expenses in the foreseeable future. With the lockdown underway, the study has shown that more than a third (38%) of Lithuanians has suffered significantly from the economic crisis caused by COVID-19.
The survey was commissioned by two Lithuanian umbrella NGOs – the National Network of Poverty Reduction Organisations and the Alliance of Lithuanian Consumer Organisations (ALCO).
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 will happen because, in economics, consumption is linked to the consumers’ expectations. Many people have already experienced the results of the worsening financial situation, but they are not critical and most still have sufficient funds for their basic needs,” said Ignas Zokas, the head of the company Spinter Tyrimai.
Two fifths (38%) of respondents indicated they had faced material and financial losses, as well as significantly reduced incomes.
Nearest plans to borrow near nil
Half of the households participating in the study indicated that they only have one source of income. In 7 of 10 cases, the main source of income is salary. Only every tenth Lithuanian citizen thinks that the financial situation will likely improve in the next three months.
“That is why it comes as no surprise that almost all respondents – 95% of them – stated they have no plans to borrow money in the near future. This dispels the myth that if banks are granted more leverage, they will lend money for consumption thus kick-starting the economy,” said Kęstutis Kupšys, vice president of Alliance of Lithuanian Consumer Organisations (ALCO).
Every fourth Lithuanian indicated they have long-term financial commitments with banks. Almost all of those in debt indicated that they have good knowledge that if they face financial difficulty, for example, lose their jobs or a vast part of their income, they can request a “credit holiday” at their credit-issuing institution. A third of the indebted are planning to request a loan repayment postponement. 32% of respondents answered “very likely” or “somewhat likely” when asked to determine the likelihood of appealing for the postponement of their loan/credit repayment if they face financial difficulties.
For many, the standard three-month “credit holiday” would not be enough. Those Lithuanian citizens who have debts would instead choose a postponement of no less than six months – 62% of those surveyed indicated such (or longer) term.
Morale influenced by uncertainty
According to Ignas Zokas, low spirits among Lithuanians are a result of uncertainty rather than the significantly deteriorating financial situation.
“Currently, we are in a state of vast uncertainty – there is fear and the understanding that the situation is getting worse, but no one knows just how deep and long the fall will be. If the economic situation gets reined in quickly (on a global scale, not in Lithuania), expectations could rapidly shift, and people’s morale could be lifted,” I. Zokas predicts.
According to K. Kupšys, faster government responses in establishing a firmer support for the poorest families which rely on a sole income source could reduce the feeling of uncertainty. “A financial cushion, like the recently promised 200 euros for the elderly and other supported social groups (resembling a “helicopter money”), should be implemented as soon as possible. This way, it can be expected that the currently felt uncertainty and fear will slowly be replaced by timid optimism that the worst is already in the past,” he says.
The survey was performed by a 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 interviewing). 1011 Lithuanian citizens, ages 18 to 75, participated in the survey. The survey aimed at uncovering how COVID-19 changed the citizens’ financial circumstances, their long-term financial commitments, and their behaviors when facing financial difficulties 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 (ALCO). The Alliance is very thankful to the European Consumer Organisation BEUC which offered support by partly covering the survey expenses.
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