Economics

 

• Membership in the European Union and NATO since 2004.
• Most attractive country for investments (Centre for Economics and Research Ltd., UK, 2005)
• Most coherent conditions for business, compared with the new EU Member States (World Bank, Doing Business 2007)

STRATEGIC GEOGRAPHICAL POSITION
With its strategic position in the European Union and well-developed infrastructure, Lithuania has strengthened relations between the countries of the European Union and the Commonwealth of Independent States. Four international airports, non-freezing seaport and two international transport routes (north-south cargo route and the railway connecting Scandinavia with the Central Europe, and the east-west cargo route linking Eastern markets with the rest of Europe) have turned Lithuania into an important centre of the international cargo transport.

EDUCATED AND SKILLED WORKFORCE
Annual number of workforce with higher university education per 1,000 of inhabitants is one of the largest in the region. Labor costs are low. Average salary in Lithuania stands at EUR 529. The unemployment level in Lithuania has been decreasing rapidly in the last years and totaled only 2.8 per cent in the middle of 2007.

DEVELOPMENT OF LITHUANIA'S ECONOMY IS ONE OF THE MOST DYNAMIC IN EUROPE
In 2006, compared with 2005, GDP grew by 7.5%. GDP per capita was EUR 7,000 and amounted to almost EUR 23.7 million. Just to compare economic growth rates of the euro area were 2.8%, of the USA - 2.9% and those of Japan - 2.2%. The growth of the country's gross domestic product persisting for the sixth consecutive year was conditioned by abundant investment and export of goods and services. The European Union membership underpinned the economic growth as a result of economic integration with the EU, opening up markets for Lithuanian exporters and efficient use of the EU structural funds.

TAX BURDEN IN LITHUANIA IS AMONG THE SMALLEST IN THE EUROPEAN UNION
In 2005, tax burden in the European Union accounted for 39.6% of GDP. In 2005, Lithuania also boasted of the lowest ratio of tax revenue to GDP, which was 28.9%.

Lithuania is constantly improving investment conditions and reducing tax burden. In July 2006, personal income tax was reduced from 33% to 27%. From the year 2008, personal income tax is reduced to 24%.

STABLE FISCAL INDICATORS
Lithuania is consistently pursuing the policy of a balanced budget. Since 2003, Lithuania's budget deficit has not exceeded the limit of 1.5%. The coming autumn, Lithuania plans to adopt a Law on Fiscal Discipline which will stipulate that the 5 year budget must be balanced or in surplus. Lithuania's debt ratio to GDP is one of the lowest in the European Union. In the middle of 2007, the national debt accounted for 16.3% of the planed GDP, and it is decreasing every year. As early as on 28 June 2004, Lithuania, alongside Estonia and Slovenia, joined the second exchange rate mechanism (ERM II) and is successfully participating in it.

THE EUROPEAN UNION STRUCTURAL SUPPORT IN 2007-2013 WILL AMOUNT TO 6.7 BILLION EUROS
In 2007-2013 Lithuania will receive the biggest ever EU support which will be used for different infrastructure projects and investments into human resources. These funds are expected to contribute to the implementation of Lithuania's strategic goals, including development of education, science and health reforms, as well as improvement of public administration.

According to the preliminary evaluation conducted by independent experts, if Lithuania used effectively all EU structural support for 2007-2013, it could additionally create around EUR 15 billion of GDP. This additional GDP could be compared to the total annual value of goods and services produced in Lithuania (in 2005 Lithuania's GDP totaled EUR 20.6 billion).

LITHUANIA IS THE MOST PROGRESSIVE EU MEMBER STATE IN TERMS OF HARMONISATION OF ITS NATIONAL LAW WITH THE EU ACQUIS
Lithuania occupies the leading position among all EU Member States with 99.5% of transposed EU legislation. Lithuania actively supports further consolidation of the EU internal market.

RAPID DEVELOPMENT OF E-BUSINESS AND KNOWLEDGE ECONOMY
Lithuania adopted the Law on Electronic Signature concurrently with the USA. Development of knowledge economy is one of the key priorities of the Government of the Republic of Lithuania. Particularly rapid quantitative growth of the Internet users is accompanied by the development of broadband network infrastructure and implementation of e-government services for business operators and population. According to the data of the first quarter of 2007, the number of households owning a personal computer grew more than twice, and those having internet access 6.5 times. Also, Lithuania is known for very high mobile connection penetration: 139 mobile phones for 100 inhabitants.

From this autumn the Lithuanian state institutions serve citizens based on one-stop principle, thus trying to save people's time and reduce red-tape.

OPENESS TO FOREIGN ECONOMIC RELATIONS
In 2006, foreign trade turnover of Lithuania amounted to EUR 26.7 billion with export accounting for EUR 11.26 billion, and import - for EUR 15.43 billion, compared with 2005, Lithuanian export and import grew by 19% and 23% respectively.

Key trade partners of Lithuania were EU-25 Member States, which accounted for 63.2% of total export and 62.5% of total import of Lithuania.

Key export partners of Lithuania were Russia, Latvia, Germany, Poland, the Netherlands and the United Kingdom. Main export commodities include: mineral fuel, electrical machinery and mechanical equipment, furniture, textile and textile articles, transport vehicles.

Key import partners of Lithuania were Russia, Germany, Poland, Latvia, the Netherlands, and Sweden. Main import commodities include: mineral fuel, machinery and mechanical equipment, transport vehicles, products of chemical industry.

KEY ECONOMIC INDICATORS OF LITHUANIA

Sources: Department of Statistics to the Government of the Republic of Lithuania, Lithuanian Labour Exchange.

* Since FDI calculation methodology was changed, it is not possible to compare 2001-2004 data with those of 2005-2006.