Lithuania
In-depth country-focused analysis on Lithuania's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Lithuania's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Lithuania, as well as the latest industry developments that could impact Lithuania's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Lithuania before your competitors.

Country Risk

Lithuania Country Risk

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Core View

  • The escalating trade war between Russia and the EU has prompted us to revise down our forecast for growth in Lithuania for 2014. Growth will accelerate in 2013, as geopolitical tensions in the region disperse, trade restrictions get lifted, and overall external demand improves.

  • Lithuania's current account surplus will swing back into deficit in 2014 as the trade war between Russia and the EU will deepen the Baltic state's trade deficit. Going forward, we forecast modest current account deficits, underpinned by persistent trade and income deficits, and mitigated by growing services surplus, while resumption in foreign direct investment flows will ensure the country meets its external financing requirements.

  • Despite the recent expulsion of a junior coalition partner out of the Lithuanian government, the centre-left cabinet of Prime...

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Lithuania Industry Coverage (9)

Autos

Lithuania Autos

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New passenger car sales in Lithuania declined 3.8% in 2012, to 11,829 units, according to figures released by the state registration agency Regitra. New commercial vehicle (CV) sales also contracted in 2012 by 4.0%, to 4,504 units, according to figures released by the European Automobile Manufacturers Association (ACEA).

This gave a total new vehicle sales figure of 16,333 units for 2012, a decrease of 3.8%, a sharp reversal to the 63.9% growth observed in 2011.

Passenger car sales remained dismal in 2013. Sales for the first 11 months of 2013 came in at 10,884 units, a decrease of 1.0% y-o-y. BMI forecasts 2013 passenger car sales to remain marginally unchanged from the previous year, at around 11,800 units.

However, CV sales have performed well in 2013. According to the ACEA, Lithuanian CV sales rose 12.4% y-o-y for 10M13, to 4,252 units. We remain bullish on CV sales and...

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Food & Drink

Lithuania Food & Drink

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Lithuania has finally escaped the most severe economic crisis over the past decade. The post-downturn period will be marked by modest economic expansion, with forecast real GDP growth of 3.4% in 2013 and 3.6% in 2014. Recovering consumer optimism will be mitigated by persisting high unemployment levels and continued government austerity measures. High emigration levels and negative natural population growth will set the country's 3m population on the decline, which will become a fundamental obstacle for food and drink industry expansion over the longer term.

Headline Industry Data (local currency)

  • Per capita food consumption growth in 2013: +2.68%; compound annual growth rate (CAGR) to 2017: +4.00%

  • Alcoholic drinks sales value growth in 2013: -0.55%; CAGR to 2017: +4.14%

  • Total mass grocery retail sales growth in 2013...

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Freight Transport

Lithuania Freight Transport

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Lithuania has seen robust economic growth, due to improvements in household consumption and strong exports, and has prompted a revised forecast of 3.4% year-on-year (y-o-y) real GDP growth, up from our previous forecast of 2.6%. This growth is reflected the country's freight sector, particularly the air freight sector, which is forecast to see growth of 9.68% y-o-y in 2014. Rail freight is also showing signs of steady, though modest, growth over our forecast period.

Lithuania's freight industry closely correlates with the health of the eurozone and in particular, the country's biggest trade partner, Russia, as these are the country's largest export markets. Therefore, the strength of the euro plays a key role in Lithuania's exports too.

Growth in Lithuanian exports of goods and services remained in the double digits, averaging 14.6% year-on-year (y-o-y) in the first two quarters of 2013. Although higher household...

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Infrastructure

Lithuania Infrastructure

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BMI View: There is cautious optimism in the Lithuanian construction sector, bolstered by improvements in the domestic economy and stronger export performance. Although these factors will prove potent enough to help the sector return to positive growth territory in 2013 and 2014, the medium- to long-term outlook will remain less impressive, owing to uncertainties surrounding key transport and energy projects. On the brighter side, its EU membership will attract investors, helping the sector post annual average growth of 3.6% between 2014 and 2023.

The key projects and developments are:

  • Port Expansion: The Lithuanian port sector received a boost from the EUR44mn (US$57.2mn) loan agreement signed between the Nordic Investment Bank (NIB) and the Klaipeda State Seaport Authority in March 2013. Funding will be used for the reconstruction of...

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Insurance

Lithuania Insurance

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BMI View: The market metrics in Lithuania have, over the last two years or so, been more favourable than in the other Baltic states.

Key Insights And Key Risks

Given the country's economic and political history of the last 25 years or so, and the identities of the main players in the non-life and the life segments, one would expect that conditions in Lithuania's insurance sector would, overall, be similar to those of Estonia and Latvia. In the other two Baltic states, the insurance sectors are (greatly) strengthened by the dominant positions of the local operations of major multinationals. Across the sub-region, key players include five large Scandinavian financial services groups ( SEB, Swedbank, Gjensidige, OP Pohjola and I f Sampo...

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Medical Devices

Lithuania Medical Devices

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Espicom Industry View: Lithuania's medical device market is returning to growth, having suffered in line with the global economic crisis in 2009 and 2010. The past three years have seen strong growth, and in 2013, the Lithuan ian medical device market wa s valued a t an estimated US$257.4mn, or US85 p er capita.

Headline Industry Forecasts

  • In 2013, the Lithuanian medical device market was valued at an estimated US$257.4mn, or US$85 per capita. After experiencing a contraction in 2009 in line with the global financial crisis, it returned to growth over the 2011-2013 period. By 2018, BMI Espicom forecasts the market will be valued at US$328.7mn or US$...

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Pharmaceuticals & Healthcare

Lithuania Pharmaceuticals & Healthcare

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BMI View:   Collective procurement of medicines with Latvia and Estonia will benefit the development of the pharmaceutical market , albeit at the cost of pricing cuts. While these markets are singularly small, together they represent an attractive and modest - sized market. The Lithuanian market on its own will pose a modest opportunity for drugmakers due to its small absolute size relative to its neighbouring markets. We expect the Lithuanian pharmaceutical market to post a local five-year compound annual growth rate (CAGR) of 3. 7 %, rising to LTL2.1 0 bn (USD7 29 mn) in 2018.

...

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Telecommunications

Lithuania Telecommunications

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BMI View: With organic growth in the mobile sector all but played out, Lithuanian operators are now focusing on improving their subscriber mixes in favour of more lucrative postpai d services. So far, they have reported mixed success and, although blended ARPUs declined at a slower rate in 2012, it was clear that increased data consumption was still insufficient to cushion the effects of declining voice usage and mobile termination rate cuts. That said , t here was an uptick in data consu mption in 2013 and a rise in the number of multi-product bundles, which bodes well for quad-play offerings should these emerge. As it is, we continue t o forecast revenue , and therefore ARPU contraction...

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Tourism

Lithuania Tourism

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BMI View:   Overall we maintain our outlooks for the Baltic states' tourism sectors over 2015. Although the countries stand to lose out due to the ongoing issues (both economic and political) arising from the Russia-Ukraine tensions, and this will constrain arrivals from these countries, we believe that these losses will largely be mitigated by increased inter-regional tourism within the three Baltic states, as well as from other European countries which increasingly view the Baltic region as a more stable alternative to Russia and Ukraine. In particular we feel that Lithuania's tourism sector could see substantial growth over the longer term if its bid to join the euro is successful, as it will facilitate multilateral tourist traffic from and to the eurozone .  

One of the main developments over 2014 has been the advancement of the proposal to...

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