Economy of Lithuania

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Lithuania
Flag of Lithuania.svg
World economic rank 86th (nominal) (2017)
currency Euro (EUR)
Trade
organizations 		EU , WTO , OECD
Key figures
Gross domestic
product (GDP) 		$ 47.26 billion (nominal) (2017)
$ 91.24 billion (PPP) (2017)
GDP per capita $ 16,730 (nominal) (2017)
$ 32,299 (PPP) (2017)
GDP by economic sector Agriculture : 3.3% (2017)
Industry : 28.5% (2017)
Services : 68.3% (2017)
growth   + 3.8% (2017)
inflation rate 3.5% (2017)
Employed 1.467 million (2017)
Activity rate approx. 42.5% (2009)
Unemployment rate 6.8% (May 2018)
Foreign trade
export € 11.78 billion (2009)
Export goods Energy carriers, chemical products, foodstuffs
Export partner Russia : 13.1% (2009)
Latvia : 10.1% (2009)
Germany : 9.7% (2009)
import € 13.12 billion (2009)
Import goods Fossil fuels, chemical products, (transport) machines
Import partner Russia : 30.1% (2009)
Germany : 11.2% (2009)
Foreign trade balance € −1.326 billion (2009)
public finances
Public debt 38.9% of GDP (2017)
Government revenue 33.8% of GDP (2017)
Government spending 33.3% of GDP (2017)
Budget balance + 0.5% of GDP (2017)

With the transition from the Soviet planned economy to the market economy, Lithuania has undergone major structural changes over the past 20 years, which are reflected in a very changeable economic development. This was characterized by a drastic slump in the transformation phase up to 1993, a subsequent recovery up to the end of 1998, a recession triggered by the Russian crisis, which forced an even stronger turn to the (Western European) EU market, which after an initial recovery (until 2003 ) triggered a boom in the context of EU accession (May 1, 2004) , which ended abruptly since spring 2008 with the financial crisis emanating from the USA . In recent years the economy has recovered and the growth rate, budget balance and unemployment rate have all improved again. In 2017, Lithuania was one of the fastest growing economies in the euro area with a growth rate of 3.8%.

As part of the restructuring, the privatization of state-owned companies (especially in the energy sector) was a prominent political issue that repeatedly triggered government crises. Other changes, such as the decline in agriculture, the immense rationalization and modernization in traditional industrial sectors such as the food industry, electrical appliance manufacturing and metal processing as well as the chemical industry, have hardly taken place. In the next few decades, the big step is to move from an extended workbench to a modern economy. In the infrastructure (transport / telecommunications / Banking ) and in services, a good foundation has been laid. Lithuania has been a member of the euro area since 2015.

Contemporary history overview

Development since 1990

After the dissolution of the Soviet Union , there were serious upheavals in the economy. Numerous businesses were shut down or privatized. Traditional trade relations broke off or were broken off for political reasons or made more difficult by new borders. Production in industry and agriculture fell. The production volume slipped to a quarter of the 1989 level by 1994. Unemployment rose to over 20%. In addition, there was hyperinflation , which reached approx. 1,400% in 1992.

Aid from the West came in 1992 when Lithuania became a member of the International Monetary Fund (IMF), which in 1993 granted Lithuania a loan of 300 million US dollars. With the support of the IMF and the World Bank , economic reforms were carried out and the litas introduced as the national currency . In the summer of 1992 a provisional currency, the talonas , had already taken the place of the ruble . In the summer of 1993 he was replaced by the Litas. Inflation slowly declined and on April 1, 1994 the litas was locked in at a fixed rate of 4: 1 to the dollar.

After the introduction of the litas there was a certain stability. From 1995 onwards, Lithuania showed continuous economic growth of at least 3.5% annually. The Russian crisis triggered a step backwards when the sales markets of the CIS countries collapsed from the end of 1998 due to the decline in the exchange rate of the Russian ruble . The high level of government debt has now turned out to be a problem because of the financial guarantees for a large number of state funds (e.g. SoDra ) and partially privatized companies (e.g. the Mažeikių Nafta oil refinery ). The privatization of the large, unprofitable companies in particular was only half-heartedly pushed forward. The conservative government had to go through a highly unpopular austerity course and was elected from office in late 2000.

Present and outlook

Due to considerable economic growth since 2001, official unemployment in Lithuania was 3.9% (February 1, 2007). Various industries have already complained of structural labor shortages, particularly in the economic centers of Vilnius , Klaipėda and Kaunas . This was accompanied by a rapid growth in wages of around 16% annually. The median wage is 1,731 litas (approx. 500 EUR - gross, February 1, 2007). After the financial crisis, unemployment rose significantly and reached 17.9% in 2010. Youth unemployment was almost 30%.

Since joining the EU, but especially after the financial crisis, there has been a strong emigration, especially of the young, mobile and well-educated population, to the countries of Western Europe (especially Great Britain, Ireland, Denmark), which have opened up and where Lithuanian "guest workers" "can earn significantly more than in their home country. With regard to the future development of Lithuania, this is counterproductive because it creates a shortage of skilled workers.

Its function as the "extended workbench" of Western Europe was soon challenged by the new EU members and candidate countries Romania , Bulgaria and Croatia , in which wages are even lower.

The future of Lithuania is characterized by further integration into western structures. At the moment there are many indications that the country z. B. the average income will not catch up with the western European level of prosperity for a long time.

Gross domestic product (GDP)

Since the Russian crisis was overcome in 1998/99, the economies of all three Baltic states boomed until the financial crisis in 2007 . Since 1995, the growth of GDP (real) in Lithuania has only been negative in 1999 and 2009. The GDP in 2008 was the equivalent of 32 billion euros and thus more than three times the value in 1999. Lithuania was often called the Baltic Tiger until 2008 because of its good economic development .

In comparison with the GDP of the EU, expressed in purchasing power standards , Lithuania achieved an index value of almost 74 (EU-28: 100) in 2015, which is around 60% of the German value.

Gross Domestic Product of Lithuania
year 1990 1992 1995 2000 2005 2010 2015
in billions of litas 0.13 3.4 26.0 45.7 72.1 95.7 k. A.
in billions of euros k. A. k. A. 5.0 12.4 20.9 27.7 37.2
per inhabitant (in litas) 36 921 7,419 13,145 21,791 30,890 k. A.
per inhabitant (in euros) k. A. k. A. 1,436 3,554 6.311 8,946 k. A.
Growth (real, in% compared to previous year) k. A. −21.3 approx. 3.5 3.6 7.4 1.6 k. A.

Source: Statistical Office of Lithuania

GDP and employment by economic sector

In the 1990s and 2000s , Lithuania's economic performance closely matched that of the old EU members. Small-scale agriculture and forestry, which in 1995 was still responsible for 11.5% of economic output, contributed 4.5% in 2007. The number of employees has also fallen sharply from a good 270,000 to 170,000. In contrast, the increased domestic demand in the boom years benefited primarily the finance and real estate industry (share of economic output increased from approx. 12% in 2003 to over 15% in 2007) and the construction industry (increase from approx. 7% in 2004 to over 10% 2007). In the construction sector, employment rose within a few years from 90,000 (2002) to over 145,000 (2006), in the real estate sector even from 10,000 in 2004 to almost 17,000 two years later. The risk of job loss in the context of the economic crisis of 2010–11, in which a strict austerity policy was pursued at the same time in order not to endanger accession to the euro zone, was correspondingly high .

Another expanding branch of the economy is the transport and telecommunications sector, which increased its share of GDP from below 8% in 1995 to just under 12% in 2007, while employment rose from 86,000 in 2001 to over 110,000 in 2007 (although it was already at 95,000). The IT sector in particular has expanded rapidly in recent years.

The importance of the tourism industry for employment has also risen sharply: from 19,000 employees in 1995 to over 25,000 (2002) to over 36,000 (2006). The number of employees in administration and in the education and social sector has remained relatively constant since 1995 (2006: 81,000 / 132,000 / 106,000), with a falling trend in the education sector and an increasing trend in the social sector.

State budget

The national Lithuanian state budget is divided into a government budget and a local government budget . The income of the local authorities amounts to about one sixth of the total income and essentially comes from their share of income tax ( almost 95% in 2008) (now over 70%, five years ago still below 50%). Then there are the purely communal property taxes . However, the municipalities still receive billions in additional funds from the government budget to accomplish their tasks.

The government budget in 2008 amounted to 25.6 billion Litas income (almost 7.5 billion euros), of which 5.1 billion Litas was donated by the EU. Of these estimated 5.1 billion, only 3.5 billion were called, so that the actual income was 23.2 billion litas (6.7 billion euros). In real terms, expenditure was 24.6 billion litas (7.1 billion euros), 2 billion litas less than planned. They were distributed as follows:

  • Economy: 25%
  • Social: 12% 1)
  • Education: 11%
  • Internal security: 8%
  • Health care: 7% 1)
  • Defense: 6%

1) (without state health and social insurance )

Debt and Budget Deficit

The total public debt in January 2006 was 11.5 billion litas (approx. 3.2 billion EUR). That was 16.9% of GDP (2005). By the end of 2008, the debt had risen dramatically to Litas 17.4 billion (EUR 4.9 billion) despite the good economic situation. The new debt amounted to 2008 677 million LTL (EUR 196 million), 2.3% of the general government annual budget of 29.7 billion LTL. Due to the sharp rise in gross domestic product, however, the national debt measured against GDP was only 15.6% (after 17% at the end of 2007). The largest relative budget deficit in recent years was marked in the election year 2004 at 596 million euros or 3.3% of total expenditure (previous years: around 2%).

taxpayer

The largest Lithuanian taxpayer is the energy company AB ORLEN Lietuva . In 2014 it paid 407.2 million euros in taxes. The second largest taxpayer in 2014 was UAB "Okseta" (178.74 million euros in taxes), the third largest taxpayer UAB Philip Morris Baltic (169.2 million euros in taxes), the fourth largest taxpayer UAB Mineraliniai vandenys (142.7 million euros in taxes ) and the fifth largest taxpayer UAB Maxima LT (111.24 million euros in taxes).

inflation

After hyperinflation in the first years of independence after 1990, the introduction of the litas in June 1993 led to a weakening of inflation from 45% in 1994 to 2.4% at the end of 1998. Until 2003, inflation remained at a low level for the years There was even a deflation in 2002 and 2003, due to the strong euro , to which the Lithuanian currency has been pegged since February 2002, and falling food prices and telecommunications costs. After joining the EU, inflation resumed due to increasing domestic demand . The economy, which has been booming since then , which has resulted in strong wage growth (see chapter “Work and salaries”), and the generous granting of personal loans have resulted in a strong expansion of the money supply and, as a result, escalating inflation. The real estate market and the leisure sector in particular recorded sharp price increases. The high oil price and more expensive gas imports did the rest. Inflation reached rates over 8% in 2007/2008.

Development of consumer prices (in% compared to the previous year; each December)
year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
all in all 189 45 36 13.1 8.4 2.4 0.3 1.4 2.0 −1.0 −1.3 2.9 3.0 4.5 8.1 8.5
Food 154 39 41 13.7 4.1 −3.7 −1.4 −1.7 6.2 −5.3 −1.9 4.8 3.5 8.1 15.5 10.9
Housing (rent & energy) 247 92 42 14.4 21.1 11.1 1.8 14.7 0.4 1.5 0.5 0.6 6.7 10.3 14.1 23.3
health 929 56 11.6 9.9 6.5 −1.4 −3.1 −2.9 −1.1 3.8 3.8 11.1 6.1 5.9 9.1 11.7
telecommunications 79 52 74 3.7 29 32 16.9 13.6 21.1 1.9 −12.2 −1.2 −5.2 0.9 −7.3 −1.9
gastronomy 290 79 17.2 9.6 5.1 3.7 −0.6 −0.4 0.3 0.5 −0.2 2.3 3.3 5.1 10.8 14.2

Source: Statistical Office of Lithuania

Work and salaries

Unemployment rates should be treated with a certain degree of caution in Lithuania. Since many have little or no entitlement to benefits, many people do not register as unemployed. This was even more true in the past, when unemployment benefits did not exist. In addition, the long-term unemployed must expect to be called upon to provide labor services (e.g. street cleaning). However, the chronological data show the economic development of the country very well.

year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2011
Number of unemployed (in thousands) 81 66 109 125 105 114 149 205 224 198 167 143 101 73 67 248
Unemployment rate 1) 4.4 3.8 6.1 7.1 5.1 5.6 7.4 10.2 11.1 9.7 8.1 6.8 4.8 3.4 3.2 15.4
Salaries (gross, in LTL ) 2) - - 481 618 778 930 987 971 982 1.014 1,073 1,149 1,276 1,496 1,802 2.175
Salary increase
(real, in% compared to previous year) 3) 		- - - - 15.8 11.7 5.1 −5.2 −0.4 4.9 9.9 6.1 7.2 16.2 19.9 20th

1) in% of all persons of working age; up to 1996 as a percentage of the workforce, hence the rate around 10–15% higher
2) the gross salary is around 35–40% higher
3) for employees in the private sector
Source: Statistical Office of Lithuania

In Lithuania, too, the unemployment rates show large regional differences: they are significantly higher in the rural regions and in these especially in the border regions in the north-west, east and south-east, while the large cities and their surrounding areas have hardly any unemployment. For 2005, the rate was in the districts of Mažeikiai , Akmenė , Panevezys , Joniškis , Ignalina , Šalčininkai , Lazdijai and Jurbarkas , as well as in the border town of Druskininkai at and above 10%, while the cities of Vilnius , Kaunas and Siauliai and the Curonian Spit and the Trakai and Elektrėnai counties on the Kaunas - Vilnius axis had rates of 3% or less. In 2007 the highest values ​​were only 6–7%. Since 2000, the medium-sized cities of Panevėžys and Šiauliai in particular have been able to reduce the unemployment rate significantly. The monthly minimum wage in Lithuania is 800 litas , the hourly 4.85 litas. The average wage in Lithuania is around 2,175 Litas (as of 2011 ). A Lithuanian works around 38 hours a week on average.

Foreign trade

In 2005 exports amounted to € 12.46 billion (LTL 42.975 billion) and imports to € 13.2 billion. Foreign trade has thus doubled since 1995. Export growth in 2005 was 27.1%, import growth 25%. The trade deficit reaches € 1.31 billion, but has decreased significantly compared to the years of the Russian crisis, when the sales markets in the east collapsed.

The main export countries are Switzerland (special case due to oil exports via trading companies based in Switzerland), Russia and Germany, where 10% of exports go. Today only 10% of exports go to Russia - in 1996 it was just under 25%. The main importing countries are Russia (22%, mainly raw materials) and Germany (17%).

The most important export goods from Lithuania are mineral products, machines and mechanical devices, vehicles and means of transport, textiles, wood and milk products.

Financial sector

1990-1995

In the Soviet Union, the Lithuanian banking system was one of the developed economic sectors. There were 7 different banks in the territory of Lithuania until 1990. The liberalization of the banking system began after perestroika . After the declaration of independence, a wave of the establishment of private credit institutions followed, as well as the privatization of previous state credit institutions. In 1993 there were already 28 banks, although the average annual income of the 3.7 million people in Lithuania was only USD 751. Interest of up to 50% per year was often declared normal (and actually paid in the first few years). Some spectacular bankruptcies followed.

Banks

All state banks in Lithuania have been privatized. The last one was the Lithuanian Sparkasse Lietuvos taupomasis bankas which is now part of Swedbank . Scandinavian groups such as SEB , Nordea and German banks such as NORD / LB and Vereins- und Westbank are particularly active .

The capital of all Lithuanian banks in 2005 was LTL 44.8 billion.

Agriculture

Industry

Within the Lithuanian industry , the two most important branches of production in Lithuania, the food industry and the textile industry, have lost importance. While the food industry has stabilized in recent years (the number of employees has been around 50,000 since 2003, 72,000 in 1995), the textile industry rapidly lost its importance after its peak in 2001 (20.3% share of industrial production). This shows that rising wages are displacing production from Lithuania. Employment in 2006 fell by 15,000 to 57,000 compared to its peak in 2003. After employment within the industry initially shifted significantly from textile to higher-quality clothing production (up to 2003), employment in this sector has also declined sharply in recent years (2006: 38,000 employees in clothing production, 19,000 in textile production ). Leather production (shoes, bags) has almost completely come to a standstill since 1995 (at that time there were still almost 8,000 employees) (1,600 people in 2006). A similar decline in importance has recently been observed in the wood and electrical industries (see below).

Industrial production of Lithuania
year 1995 1998 2000 2003 2005 2007
Value in billions of litas 5.9 9.0 9.7 12.5 16.5 19.8
Year-on-year increase (real, in%) 5.2 12.1 13.7 15.9 6.8 6.4
Share of industry in GDP (in%) 25.5 23.0 23.8 24.5 25.3 22.6
Share of the individual sectors (in%)
Food 32.5 28.8 25.4 22.3 21.0 20.6
chemistry 7.8 6.9 6.4 4.9 6.1 11.1
Textile 16.2 18.6 20.0 16.6 13.0 10.0
Wood 5.0 5.5 7.4 9.6 9.6 8.8
Plastic / rubber 1.0 2.3 3.4 6.3 6.5 6.2
metal 2.9 3.2 3.7 4.1 5.8 7.1
Non-metal 5.9 5.2 4.1 4.3 5.2 6.1
Print / paper 8.5 8.1 7.6 7.4 6.3 6.0
Electro / optics 5.2 7.6 8.2 9.0 8.3 5.6
Transportation equipment 2.7 3.2 3.0 3.2 4.8 4.8

Energy industry

In Lithuania, the three largest energy consumers in 2017 were the transport sector (38.5%), private households (28.1%) and industry (18.8%).

According to a decision of the Seimas from June 2018, Lithuania wants to ensure the transition to an environmentally friendly energy supply. The aim is to generate 100 percent of electricity domestically by 2050. In addition, 80 percent of the total electricity demand should then be covered by renewable energy sources. In 2017, a good 60 percent of the electricity generated came from renewable sources.

The energy efficiency in buildings and industry should also be increased. The integration of the Lithuanian energy system into the European pipeline networks is planned. This requires synchronization with the Western European power grid on the one hand and the connection of the natural gas network to the Western European pipeline system on the other.

Large companies

Large companies operating in Lithuania with a turnover of over 100 million euros or more than 1,000 employees are, for example:

Individual evidence

  1. ↑ World Bank (PDF; 14 kB); Retrieved September 17, 2011.
  2. ↑ a b IMF.Retrieved October 13, 2010.
  3. ↑ Eurostat - Gross Value Added in Agriculture Accessed on October 13, 2010.
  4. ↑ Eurostat - Gross Value Added Industry. Accessed 13 October
  5. ↑ Eurostat - Gross Value Added in Services Accessed on October 13, 2010.
  6. ↑ Real GDP growth rate - volume: change from previous year (%). Eurostat, accessed March 20, 2013 .
  7. ↑ Eurostat - Employment Accessed on October 13 of 2010.
  8. ↑ Unemployment rate  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. Retrieved May 12, 2012.@1@ 2Template: Dead Link / www.stat.gov.lt  
  9. ↑ Eurostat - export total. Accessed on October 13, 2010.
  10. ↑ a b Statistics Lithuania - Exports & Imports ( Memento of the original from April 19, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Retrieved October 13, 2010.  @1@ 2Template: Webachiv / IABot / www.stat.gov.lt
  11. ↑ a b Foreign Office - Lithuanian Economy Retrieved October 13, 2010.
  12. ↑ Eurostat - import total.Retrieved on October 13, 2010.
  13. ↑ Eurostat - Foreign Trade Balance. Accessed on October 13, 2010.
  14. ↑ Eurostat - Government debt. Accessed 16 April 2011
  15. ↑ Eurostat - Government Revenue.Retrieved April 16, 2011
  16. ↑ Eurostat - total expenditure. Accessed April 16, 2011
  17. ↑ Annual review 1999 on rferl.org (English)
  18. ↑ a b Statistical Office of Lithuania
  19. ↑ http://www.indexmundi.com/g/g.aspx?c=lh&v=74&l=de indexmundi.com according to CIA World Factbook
  20. ^ Emigration from the Baltic States, publications, Lithuania Liaison Office, Konrad-Adenauer-Stiftung
  21. ↑ Gross domestic product (GDP) per capita in PPS. Eurostat , June 1, 2016, accessed December 4, 2016 .
  22. ↑ a b c database query, July 8, 2015 ( memento of the original from April 2, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  @1@ 2Template: Webachiv / IABot / db1.stat.gov.lt
  23. ↑ State budget Lithuania 2008, income side, document of lit. Ministry of Finance (accessed on February 21, 2009; English; PDF; 10 kB)
  24. ↑ Budget statement 2008 ( Memento of February 22, 2009 in the Internet Archive ) Message on delfi.lt, February 20, 2009.
  25. ↑ Paskelbtasdaugiausiai mokesčių sumokėjusiųjų sąrašas (daily newspaper Verslo žinios )
  26. ↑ Database query, February 18, 2009 ( Memento of the original from April 2, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / db1.stat.gov.lt
  27. ↑ (Info on the event in June 2019)
  28. ^ German-Baltic Chamber of Commerce German-Baltic Chamber of Commerce from June 25, 2018