Economy of Lithuania

Lithuania has brought in the past 20 years with the transition from the Soviet planned economy to a market economy major structural changes behind that are reflected in a very turbulent economic development. This was marked by a dramatic drop in the transition period until 1993, followed by a recovery until the end of 1998, a recession triggered by the Russian crisis and they forced an even stronger focus on ( Western European ) EU market after the initial recovery (until 2003 ) in the context of EU accession (1 May 2004 ) triggered a boom which started with the outgoing of the U.S. financial crisis found its abrupt end since the spring of 2008. As part of the restructuring, privatization of state enterprises ( esp. in the energy sector ), was a major political issue that has repeatedly triggered government crises. Other changes, such as the decline of agriculture, which are immense rationalization and modernization in traditional industrial sectors such as the food industry, the electrical equipment manufacturing and metal processing and chemical industries vonstattengegangen hardly noticed. In the next decades the big step is coming to pass from an extended workbench to a completely modern economy, in which the high social standards can be paid as in the old EU Member States. In the infrastructure (transport / telecommunications / banking) and in services has laid a good foundation.

2.1 GDP and employment by economic sector

5.1 Labour Migration

8.1 1990-1995
8.2 banks

9.1 Manufacturing
9.2 energy

Time Historical Overview

Development since 1990

After the dissolution of the Soviet Union took place in the economy serious upheavals. Many businesses were shut down or privatized. Traditional trade relations broke off or were terminated for political reasons or complicated by new limits. The production in industry and agriculture declined. The production volume slipped to 1994, a quarter of the level of 1989. Unemployment rose to over 20%. There was also a hyperinflation, which reached 1,400 % in 1992. By 1995, consumer prices rose by 70 times.

Help from the West came in 1992 when Lithuania became a member of the International Monetary Fund ( IMF) and the Lithuania granted 1993 loans amounting to 300 million U.S. dollars. With the support of the IMF and World Bank economic reforms have been made and introduced as the national currency, the litas. In the summer of 1992 was already a temporary currency, the Talonas, taken the place of the ruble. In the summer of 1993, he was replaced by the litas. Inflation declined slowly, and the litas could commit to a fixed exchange rate of 4:1 on 1 April 1994 to the dollar.

After the introduction of the litas there was a certain stability, and Lithuania had since 1995 a continuous economic growth of at least 3.5 % a year on. A step backwards triggered the Russian crisis, as broke away from the end of 1998 by the depreciation of the Russian ruble, the markets of the CIS countries. Now the high indebtedness of the state proved because of the financial guarantees for a myriad of state funds (eg SoDra ) and part - privatized companies (such as the oil refinery Mažeikių Nafta ) as a problem. The privatization just the large loss-making enterprises had been driven half-heartedly. The conservative government had to drive a deeply unpopular austerity measures and was elected in late 2000 out of office.

Presence and outlook

As a result of significant economic growth since 2001, the official unemployment rate in Lithuania was 3.9 % ( 1 February 2007). Various industries complained already have a structural shortage of labor, particularly in the economic centers of Vilnius, Klaipeda and Kaunas. This was accompanied by a rapid growth in wages annually by about 16%. The average wage is 1,731 litas ( about 500 EUR - gross, 1 February 2007). Still living in 2006 still 16 % of the population below the poverty line, 3 % of households in extreme poverty.

The future of Lithuania is characterized by further integration into Western structures (NATO, EU, euro Europe, the Baltic Sea ). At present, however, there are many indications that the country will find eg the average income for a long time no connection to the Western European level of prosperity.

The function as an "extended workbench" of Western Europe was soon made to him by the new EU members and candidate countries Romania, Bulgaria, Croatia dispute, where wages are even lower.

Since joining the EU, there was a strong emigration especially of the young, mobile and well- educated population in the countries of Western Europe (especially the UK, Ireland, Denmark ), which have opened and where Lithuanian "guest workers" can clearly earn more than in their home country. With regard to the future development of Lithuania, this is counter-productive, it could cause a shortage of skilled workers arises.

Gross Domestic Product ( GDP)

Since overcoming the Russian crisis of 1998/99 the economy of all three Baltic states boomed up to the current economic crisis. In Lithuania, the growth of GDP ( in real terms) until 2007 was a year with more than 7%. The GDP in 2008 reached 111 billion well litas ( LTL), which is about 32 billion euros and thus ( in euros ) more than three times the value of 1999. This results in a per capita GDP of more than 33,000 LTL yields (almost 10,000 euros; comparing Germany: € 26,400 ).

Expressed in comparison with the EU GDP in purchasing power standards reached Lithuania 2008 index value of just under 60 (EU -25: 100), just under half of the German value.

Lithuania is known for its good economic development often Baltic Tiger.

1 ) Expectation of Lithuanian Ministry of Finance

Source: Statistical Office of Lithuania

GDP and employment by economic sector

Over the last 20 years, the economic performance of the old EU members has greatly equalized. The agriculture and forestry, which in 1995 was responsible for 11.5 % of economic output, was in 2007 still with a share of 4.5%. Similarly, the number of employees has greatly reduced from 270,000 to 170,000. In contrast, have mainly the financial and real estate sector (share of economic output of around 12 % in 2003 increased to over 15 % in 2007) of the rise in domestic demand during the boom years and the construction industry benefits (an increase of around 7 % in 2004 to over 10 % in 2007). In the construction sector, employment increased 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. According to big here is the risk of job loss in the context of the current economic crisis. Another expansive industry is the area of transport and telecommunications, was able to increase its share of the GDP of less than 8 % in 1995 to almost 12 % in 2007, employment rose from 86,000 in 2001 to over 110,000 in 2007 ( in 1995, however, was ever at 95,000 ). Has risen sharply the importance of the tourism industry for employment: from 19,000 employees in 1995, over 25,000 ( 2002) to 36,000 (2006). The number of employees in the administration and in the education and social sectors have remained relatively constant since 1995 (2006: 81,000 / 132,000 / 106,000 ), with a falling trend in education and a rising in the social sector.

State budget

The National Lithuanian state budget is divided into a budget the government and one of the authorities. The revenues of the government here amount to about one-sixth of the total revenues and were primarily, in 2008 to almost 95 % of their share of the income tax ( now over 70 %, five years ago, less than 50% ). In addition there are the purely municipal property taxes. However, the municipalities receive for their tasks provides additional funds billions of dollars from the government budget.

The government budget in 2008 amounted to 25.6 billion litas revenue (almost 7.5 billion euros ), of which 5.1 billion litas grants from the EU. Of these estimated 5.1 billion but only 3.5 billion were retrieved so that the actual revenue at 23.2 billion litas were ( 6.7 billion euros ). Expenditure was real at 24.6 billion litas ( 7.1 billion euros ), which were LTL 2 billion less than planned. They were distributed as follows:

Economy: 25 %
Social: 12 % 1)
Education: 11%
Homeland Security: 8%
Health: 7 % 1)
Defense: 6%

1 ) (excluding state- health and social insurance )

The total debt of the public sector amounted to 11.5 billion in January 2006 Litas (approx. EUR 3.2 billion ). That was 16.9% of GDP ( 2005). By the end of 2008, the debt has increased despite good economic dramatically to 17.4 billion litas ( 4.9 billion euros ). The debt amounted to 2008 677 million LTL ( EUR 196 million), 2.3% of total government annual budget of 29.7 billion LTL. Due to the sharp rise in gross domestic product, the public debt amounted to a percentage of GDP, however, only 15.6 % (from 17 % at end- 2007). The largest relative budget deficit in recent years has been in the election year 2004, 596 million euros, or 3.3 % of the total marks (previous years: around 2% ).

Inflation

After a hyperinflation in the early years of independence after 1990 the introduction of the litas in June 1993 to a slowdown in inflation from 45 % in 1994 to 2.4 % at end- 1998. Until 2003, inflation remained at a low level, in the years 2002 and 2003 even deflation was recorded for the strong euro exchange rate to which the Lithuanian currency is pegged since February 2002, and declining food prices as well as telecommunications costs were responsible. After joining the EU continued inflation due to rising domestic demand again. Since that time, booming economy, which drew a strong wage growth by itself (see chapter " work and wages " ), and the generous allocation of retail loans led to strong growth of money and in order for a rampant inflation. In particular, the real estate market and the leisure industry experienced sharp price rises. The high price of oil and gas imports more expensive, did the rest. Inflation peaked at 2007/2008 rates above 8%.

Source: Statistical Office of Lithuania

Work and salaries

Unemployment rates are to be treated in Lithuania with some caution. Since for many, there is little or no entitlement to a benefit, many people report not unemployed. This was even more so in the past, when unemployment benefits did not exist. In addition, long-term unemployed must expect to be called upon to work services (eg street cleaning ). However, the data show in the chronological history of very good economic development of the country.

1) % of all people of working age; to 1996 as a percentage of the labor force, therefore rate about 10-15% higher 2) the gross salary is higher by about 35-40 % 3) for employees in the private sector Source: Statistical Office of Lithuania

In Lithuania, the unemployment rates on regional differences: they are in the rural areas is significantly higher and in these, especially in the border regions in the north- west, east and south, while the big cities and their surrounding areas hardly know unemployment. For 2005, the rate in the counties Mažeikiai, Akmenė, Panevėžys, 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 Šiauliai and the Curonian Spit and the on the axis Kaunas - Vilnius counties located Trakai and Elektrėnai rates of 3 % or less had. 2007 were the highest values nurmehr at 6-7 %. Since 2000, especially the medium-sized cities Panevėžys and Šiauliai were able to reduce the unemployment rate significantly. The monthly minimum wage is 800 Litas in Lithuania, the hourly 4.85 litas. The average wage in Lithuania is about 2,175 litas ( as of 2011). About 38 hours does a lithuanian per week on average.

Labor migration

See population of Lithuania

Direct investment

The importance of EU accession for further economic development is very large. Make foreign direct investment of € 4.7 billion ( first quarter 2004), nearly one-third of the annual economic product from. German companies are with a total investment of € 416 million behind Denmark and Sweden on the 3rd place (10 % of all investments). Large investors are, inter alia,

Telecommunications:

Finance:

Food and Beverage

Energy

Foreign trade

The exports in 2005 amounted to € 12.46 billion ( 42.975 mlrd. LTL), and imports to € 13.2 billion. Foreign trade has doubled since 1995. Export growth in 2005 was 27.1%, import growth of 25%. The trade deficit reached € 1.31 billion, but has in comparison to the years of the Russian crisis, as the markets in the East slumped significantly reduced.

Main export countries are Switzerland (special case by oil exports via trading company based in Switzerland), Russia and Germany, where 10 % of exports go. After Russia today go only 10 % of exports - in 1996 it was just under 25%. The main importing countries are Russia (22 % v. a commodities) and Germany ( 17%).

Financial sector

1990-1995

In the Soviet Union the banking system was one of the developed sectors of the economy. In the territory of Lithuania until 1990, there were 7 different banks. The liberalization of the banking system began after perestroika. After the declaration of independence was followed by a wave of start-ups of private banks and the privatization of existing state banks. 1993, there were already 28 banks, although the average annual income of the 3.7 million inhabitants of Lithuania amounted to only 751 USD. The interest in banks were often declared to 50 % annually as normal ( and in the early years actually paid ). This was followed by some spectacular failures.

Banks

All state-owned banks were privatized in Lithuania. The last one was the Lithuanian Savings Bank Lietuvos bankas taupomasis now Hansa Bankas (recently Swedbank, as adopted by this ). Active are particularly Scandinavian groups such as SEB, Nordea and the German banks as NORD / LB and association and the West Bank.

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

Branches of production

Manufacturing

Within the industry, the two main branches of production in Lithuania, the food industry and the textile industry declined in importance. While the food industry has stabilized in recent years ( the number of employees hold since 2003 at about 50,000 people, 1995, 72,000 ), the textile industry (20.3% share in the industrial production ) lost rapidly after the peak in 2001 important. This shows that rising wages displace production from Lithuania. The employment was compared with the peak of 2003 in 2006 fell by 15,000 to 57,000 people. After the employment within the industry initially had postponed (until 2003) strongly dependent on the textile in favor of higher quality clothing manufacture, is in the last years, employment in this area was recorded ( 2006: 38,000 employees in clothing manufacturing, 19,000 in the textile production ). The manufacture of leather ( shoes, bags) since 1995 (then almost 8,000 employees) almost come to a complete standstill (2006 1,600 ). A similar meaning falls can be observed in recent years in the wood and in the electrical industry ( see below).

Energy

See Energy in Lithuania

Large companies

See: List of the largest companies in Lithuania

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