Export

Lithuania, the largest Baltic State, is breaking out of the economic crisis. In 2010, it was the increasing export alone that salvaged the country’s economy. This year more spheres will become involved in rescuing the country’s economy – investments, domestic consumption.

 Lithuania’s economy, which found a way out of the clutches of the crisis last year, is ready to spurt. Lithuania finished the year 2010 with a symbolic growth in the gross domestic product (GDP), and this year it should rise by at least 3 per cent.

Analysts who forecast this growth draw an optimistic picture of Lithuania’s economy. It was export that rendered the country’s economy the brightest colours, and this year the recovered domestic consumption is expected to revive the economy of the largest Baltic State.

There is no doubt that the last year’s problems will not disappear this year – great saving, an increase in energy resources and food products, a sufficiently high unemployment rate and a high level of emigration. However, as last year, export should be the main factor that helps the country’s economy recover. The companies, which are oriented towards selling commodities and services abroad, contribute mostly to the growth of the gross domestic product. Manufacturers who have adapted themselves to the hard times will show signs of growth this year too. Though international analysts warn that the growth in Lithuania’s gross domestic product depends on the moods in the West to the greatest extent. If the largest European Union states are going to climb up, the same awaits Lithuania who is mainly alive on the sales abroad.

Last year’s export statistics proves that. When the country’s economy was gradually rising from the quagmire of the crisis, exports soared dramatically. Economy of the countries of Western Europe recovered faster than that of such small countries as Lithuania. Therefore consumption that is increasing abroad is good news to Lithuania.

Last January-October alone the country’s export increased by as much as 31.4 per cent as compared with the same period last year. Some branches of industry showed an even more impressive growth. 

For example, Lithuanian farmers exported as much as 91 per cent more grain than last year. Not only good crops determined this but also favourable prices abroad, larger problems in Russia and Ukraine. Summer heat and fires destroyed huge areas and the state was left without a large part of its crops.

The largest buyers are the same

The economic crisis that hit Lithuania so severely left the markets most faithful to Lithuanian products almost unchanged. Russia, Germany and Latvia are the largest three countries to which Lithuanian business people export the greatest amounts of their goods and services. These countries are followed by Poland, Holland, Estonia, the United Kingdom, Belarus, etc.

This tendency formed in the course of several years. A large and insatiable Russian market is gold-diggings for Lithuanian food manufacturers and milk processors. Germany gladly buys goods of Lithuanian chemical and other industries. Lithuanian trading networks in which one can find goods made in Lithuania operate in Latvia. Lithuanian products, especially PET products, are forcing their way to the market of neighbouring Poland. The direction leading to Holland is of significance to petroleum products processed in Lithuania.

The recovery of export was determined by the manufacturing sectors of chemical and plastic products, as well as the paper and wood processing sectors. The sector of transportation services and export of textiles have increased especially markedly.

Export of Lithuanian products to Russia and Ukraine was increasing at the greatest speed last year.

The total export to Russia in January-September of 2010 as compared with that during the same period in the year 2009, increased by as much as 47.1 per cent.

Lithuanian dairy products had the greatest impact on the growth in exports to Russia. In this country a dairy product with the label Made in Lithuania is a symbol of the highest quality and a delicious product. Therefore it is not surprising that export of Lithuanian dairy products to Russia has increased by as much as 48.6 per cent as compared with that last year. In July, the increase in exports totalled even as much as 80 per cent.

The total export to Russia in 2010, as compared with that in 2009, increased by approximately as much as 50 per cent.

Manufacturers of cheeses can boast the greatest achievements in export. It is this dairy product that was most marketable in the Russian market last summer.

Lithuanian meat products, as well as live pigs, also played a significant part in the growth of export.

An even greater leap in exports has been made to the Ukrainian market. In January-August last year a growth in export accounted for as much as 62.4 per cent as compared with that during the same period of the previous year. Though Lithuania is in place 10 in the table of export to this huge country, an especially rapidly growing export gives many hopes to the manufactures.

Popularity of fuels, that were produced in Lithuania, in Ukraine contributed greatly to this success. Lithuanian petrol in this country is more expensive than local petrol, however, this fuel is the standard of quality for the Ukrainians. Therefore production of Mažeikiai Oil Refinery Orlen Lietuva accounts for about 70 per cent of the total export to Ukraine.

Paper, carton, plastic windows manufactured in Lithuania are exported to Ukraine quite successfully. Lithuanian refrigerators Snaigė are also appreciated greatly in Ukraine because this company has a plant in that country.

Main export goods to Germany are plastics commodities accounting for 15 per cent of the total export to that market. During the first six months of 2010, trade in plastics commodities increased especially rapidly – almost by 60 per cent. PET accounts for about 70 per cent of all export of plastics commodities. 

By the way, Lithuania is the main partner in PET trade to Germany; in 2009, it presented to Germany as much 22 per cent of all PET imported by Germany! According to export volumes of this commodity, only the Netherlands is catching up with us – 19.6 per cent of import.

The annual export of furniture to Germany is considerable too. However, last year it accounted for 24 per cent of the annual growth. Wooden furniture, particularly sitting room and dining-room furniture, constituting half of furniture export, is in greatest demand in Germany.

Bicycles is another commodity, which is successfully exported to Germany. It is true, in this case Šiauliai plant Balt vairas, which has centuries-old traditions and which receives parts from the Germans, contributes most to this export. Hence, parts are German, and assembling is Lithuanian. A combination of quality. As compared with the first half of the year 2009, trade in bicycles has increased by as much as 66 per cent. Lithuania is the fourth supplier of bicycles to Germany in the world.

When assessing Lithuania’s export by branches of industry, textile workers, manufacturers of apparel caused the greatest surprise during the years of the crisis.

Prior to the crisis, manufacturers of food products, petroleum products and plastics commodities showed the best export results. However, the hard times emphasised tendencies in their own way. Textile workers found themselves at the top of the fastest growing exporters. The branch of industry, which has almost been written off before, showed amazing results during the crisis. Last year the manufacturers of apparel hardly managed to fulfil all the orders. Recently their profit and export have been growing most among all other industrial sectors. In April and May their profit increased by as much as 123.3 times as compared with that during the same period of the past year. Profits of all textile and apparel manufacturers of the country have increased by several times as compared to that in 2009. “In the second quarter of 2009 our industry was at the bottom. And this year the companies are overloaded with orders”, explained the Director General of the sewing company Omniteksas Audronė Pocienė. During the second quarter the Company’s income increased by as much as 80 per cent. The number of orders from abroad also increased at the company Garlita, which creates innovative apparel. “New customers appeared not only in Europe but also in the East, Africa”, said the Head of the Company Juozas Martikaitis. According to him, new customers want ever-larger quantities of our products. The old customers also are returning. The Scandinavians have ordered larger quantities of winter sports clothes, Lithuanian trades people are also becoming bolder. Manufacturers of clothes have noticed a general tendency – the old customers are leaving China and are returning to Europe. “During this crisis the Europeans started demanding higher-quality clothes. We can make clothes faster, and we are more flexible than the manufacturers in China. They do not pose such a threat to us as they did earlier”, noted the Director General of Omniteks.   

An increase in export that is much faster than it has been forecasted improves economic forecasts of Lithuania and other Baltic States. However, according to the analysts, “a second economic propeller” – domestic consumption – is needed. Its joining in would allow Lithuania to break out of the crisis in 2011 faster. It is forecasted that in 2011 new jobs will be created in Lithuania and gradually the household incomes will start to increase. The latest review of macroeconomics prepared by Swedbank forecasts that the gross domestic product of Lithuania will grow by as much as 3 per cent in 2011, and in the year 2012 the increase will account for 4.5 per cent. “An increase in export related to the recovery of the world trade has played a significant role in stabilizing Lithuania’s economic situation in 2010. Volumes of export will increase further. However, this is only one of the sources of the country’s economic growth. We see signs that in 2011 and 2012 a second engine stimulating economy – domestic consumption– will join in”, said Tomas Andrejauskas, Head of Swedbank Markets in Lithuania. In 2010, Lithuania’s export grew faster than it had been expected and became a significant propeller of the economic growth. However, in 2010 the economic growth in the countries, which are most important trading partners of Lithuania, most probably will decrease, so export volumes will grow slower than they did last year. It is forecasted that export will increase by as much as 6.5 percent in 2011. 

Industry that creates small or medium-sized value added further remains the backbone of Lithuania’s export – the fastest growth is observed in chemistry, wood processing industries and also in the transport sector.