The past decade for
Lithuania was especially complicated and difficult in relation to economic
development. Current economic situation is rather stable and growth is obvious.
Low inflation, competitive national currency (pegged to EUR at point 3.4528
LT), low interest rates on long-term loans and other features show concrete
developments and improvements in economic sphere. Lithuania has conducted the
most trade with Russia, has been slowly rebounding from the 1998 Russian
financial crisis. High unemployment, still 10% in 2003, and weak consumption
have held back recovery. Trade has been increasingly oriented toward the West.
Lithuania has gained membership in the World Trade Organization and has moved ahead
joining the EU. Privatization of the large, state-owned utilities, particularly
in the energy sector, is underway. Overall, more than 80% of enterprises have
been privatized. The US government and business aid have helped in the
transition from the old command economy to a market economy.
Some over figures:
-
Industrial
production growth rate: 6%
-
Electricity –
production: 10.966 billion kWh
-
Exports -
commodities: mineral products 23%, textiles and clothing 16%, machinery and
equipment 11%, chemicals 6%, wood and wood products 5%, foodstuffs 5%
-
Exports -
partners: UK 13.8%, Latvia 12.6%, Germany 12.6%, Russia 11%, Poland 6.3%
-
Imports -
commodities: mineral products 21%, machinery and equipment 17%, transport
equipment 11%, chemicals 9%, textiles and clothing 9%, metals 5%
-
Imports -
partners: Russia 25.3%, Germany 17.2%, Poland 4.9%, Italy 4.2%, France 3.8%
Industries:
According to the
statistics Lithuanian industry is growing through 3 past years. Highest growth
rate was up to 15 % comparing to the past years. Nearly all the significant
enterprises were privatized. The legal basis regulating the activity of
enterprises was created. Lithuanian industry includes these main branches –
food, beverages and tobacco products; textiles and wearing apparel; wood and
wood products, paper and paperboard, printing; furniture; electrical machinery;
refined petroleum products, chemicals and chemical products, metal products and
so on (concrete products: metal-cutting machine tools, electric motors,
television sets, refrigerators and freezers, shipbuilding (small ships),
fertilizers, agricultural machinery, optical equipment, electronic components,
computers, amber). Development in the industrial sector is related to changing
industrial processes and products aiming at reducing their negative
environmental impact (increasing environmental protection).
Agriculture:
The past decade was
the period of cardinal changes in Lithuanian village. Amount of agricultural
production and the structure of production changed rather significantly. Most
changes, firstly: farmers and alike inhabitants are now the biggest suppliers
of crops and other agricultural products. Agricultural partnerships take second
place. Secondly, agricultural production stabilized in this way according to
best-harvested products: potatoes, vegetables, sugar-beats, grain, fruits and
berries. Other agricultural products: beef, milk, eggs; fish, flax. Lithuanian climate changes in recent years
have great negative impact on agricultural production. Low prices on some
agricultural products force farmers to take extreme measures to get subsidies.
EU integration will make even stronger impact on Lithuanian agriculture –
severe competition will worsen farmers position heavily.
Energy resources:
The existing
Lithuanian energy sector was formed in 1990 and hasn’t changed a lot since that
time. Main energy resources are: wood, peat, straw, municipal waste, bio-gas,
nuclear metals, water, sun, wind. Natural energy resources are not always
suitable for simple and common use, that’s why natural resources are
transformed to most wanted source of energy – electricity and heat.
Transformation is fulfilled through power-plants of such types: hydro-plants,
heating-plants, nuclear-plants and others. Electricity - production by source:
fossil fuel: 20%, hydro: 3%, other: 1%, nuclear: 77%. Lithuanian energy sector is powerful enough to provide energy to
other worldwide markets. Low energy consumption level forces government to seek
for efficient use of energy resources and make serious decisions. As Lithuania
is
entering EU, one of
the main work in energy sector to be done is to decommission Ignalina Nuclear
Power Plant and completely renew other types of plants. Decommission is now
underway and planed to fulfill by 2010.
Lithuanian manufacturers constantly feel great competitive pressure form EU market (it will become even greater, after entering EU). Only competitive production can resist this pressure. The in the government policy of recent years a particular attention has been paid to creation of specific competitive advantages: a) investment concentration, b) better use of human capital, c) expansion to world markets.