1 / 25

Dr. Gitanas Nausėda CEO Adviser SEB Bank, Lithuania Kuwait March 18, 2008

Dr. Gitanas Nausėda CEO Adviser SEB Bank, Lithuania Kuwait March 18, 2008. Lithuanian economy: success story and future prospects. Key facts about Lithuania. Population 3.4 million Area 65300 sq. km

kairos
Télécharger la présentation

Dr. Gitanas Nausėda CEO Adviser SEB Bank, Lithuania Kuwait March 18, 2008

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dr. Gitanas NausėdaCEO AdviserSEB Bank, LithuaniaKuwaitMarch 18, 2008 Lithuanian economy: success story and future prospects

  2. Key facts about Lithuania Population 3.4 million Area 65300 sq. km Government Democratic Republic (Parliament and President) Currency Litas 1 EUR = 3.4528 (pegged to EUR) Ethnic structure (% of total population) Lithuanians 83.5 Poles 6.7 Russians 6.3 Sovereign ratings S&P A- Moody’s A2 Fitch A

  3. Recent facts of Lithuanian history • In 1990, Lithuania escaped the Soviet occupation and re-established its independence, altogether moving from planned to market economy. • In 2004, Lithuania joined both European Union and NATO. • At the end of 2007, Lithuania became a member of Schengen area.

  4. How advanced is Lithuanian economy? GDP per capita in PPS (EU-27=100%) 2007F 2000 Estonia 44.8% 71.7% Lithuania 39.4% 61.5% Latvia 36.8% 60.6% Source: Eurostat.

  5. Lithuania has simple tax system with one of lowest tax rates in CEE region Standard rates of main taxes in CEE countries as of January 2008 (%) 5% VAT rate for books and magazines, pharmaceuticals, frozen meat, fish, ecologic food products, transportation of passengers, accommodation and artist services; 9% VAT rate for residential construction and renovation * 0% rate for undistributed profits. ** 4% is temporary added “solidarity tax”. *** Individuals whose annual income exceeds the amount of the individual pension contribution cap are subject to 4% solidarity surtax. **** Corporate income plus municipal tax. Source: websites of national investment development agencies, March 14, 2008; The Economist for Romania.

  6. Monetary policy in Lithuania • Lithuania’s monetary policy is based on currency board regime: • National currency (litas) is unlimitedly convertible to anchor currency (euro) at absolutely fixed exchange rate (1 EUR = 3.4528 LTL); • Currency in circulation at least 100% covered by gold and foreign currency reserves; • No active and independent monetary policy (dependent on European Central Bank). • According to EU Treaty, Lithuania is obliged to join euro zone and in preparation for future euro introduction, currently participates in ERM-II since June 2004.

  7. Euro introduction is on political agenda of most of new EU members Entry into ERM-II Euro introduction / SEB forecast Euro introduction / official aim of national authorities Slovenia 2004 Introduced in 2007 Introduced in 2007 2005 Introduced in 2008 Introduced in 2008 Cyprus Malta 2005 Introduced in 2008 Introduced in 2008 Slovakia 2005 2009 2009 20042012-132010 or later Lithuania Estonia 2004 2012 -- Czech Rep. 2009* 2012 -- Poland 2009* 2012 -- Latvia 20052013-- 2009* 2014 -- Hungary 2013* 2016 -- Bulgaria 2014* 2017 2014 Romania *SEB Bank’s forecasts.

  8. Inflation criterion is the only obstacle for euro introduction in Lithuania PROGRESS ON MAASTRICHT CRITERIA * SEB Bank’s estimate for a given period. ** Maximum deviation while participating in ERM-II.

  9. Lithuania’s economic development stays strong • Natural process of convergence with Western living standards; • EU financial support; • Tax and other economic reforms; • Ensured long-term macroeconomic stability. Source: national statistics bureaus; SEB forecasts.

  10. Manufacturing is the largest economic sector while services are the fastest growing Source: Statistics Lithuania.

  11. Lithuania’s economy is a well diversified composition of industry, agriculture, energy and services • Lithuania did not face de-industrialization, as an exception among emerging markets. A lot of large industrial enterprises (oil refinery, chemistry, food production plants, shipbuilding and construction companies) successfully survived the shift from planned to free-market economy. • The largest industrial companies that survived from Soviet times are (turnover in 1-3Q 2007 is given in parenthesis): MAŽEIKIŲ NAFTA – refined oil products (EUR 1978 mn) ACHEMA – chemicals (EUR 296 mn) LIFOSA – chemicals (EUR 186 mn) ŠVYTURYS-UTENOS ALUS – beer, beverages (EUR 114 mn) SNAIGĖ – refrigerators (EUR 89 mn)

  12. Newcomer companies – market leaders • Many companies were created on the green field in last decade and already play important role in the Baltic region MAXIMA LT – retail trade, largest in the Baltics (EUR 1432 mn) SENUKŲ PREKYBOS CENTRAS – retail trade of construction materials (EUR 330 mn) NEO GROUP – production of PET granules (EUR 245 mn) SANITAS – production of pharmaceuticals (EUR 74 mn)

  13. Lithuania’s nuclear future • According to EU Treaty, Lithuania will have to close its nuclear power plant (now supplying 70% of total electricity) at the end of 2009. • Power bridges to Poland and Sweden are to be build until 2015. • Construction of new nuclear plant is planned, with realistic launching date stretching to 2017-2019. Forces united for construction of new nuclear plant in Lithuania Lithuania National investor “Leo LT” Poland Government, through public energy companies (62% stake) Private electricity supplier “NDX Energija” (38% stake) Latvia Estonia

  14. EU Structural Funds offer substantial support to economic growth In 2007-2013 period, EUR 6.8 billion is allocated for Lithuania from EU Structural Funds Source: Ministry of Finance, Economist Intelligence Unit.

  15. Inflationary pressures have strengthened in all three Baltic States Source: Eurostat; SEB forecasts.

  16. Gross wage growth has been gaining momentum since entry to EU but salaries still are relatively low EU entry Source: national bureaus of statistics, forecasts by SEB Bank.

  17. Lithuanian export structure is well diversified by countries Main (commodity) export markets of Lithuania in 2007 (%) Main (commodity) import markets of Lithuania in 2007 (%) Source: Statistics Lithuania.

  18. Food, refined oil products and machinery are dominating goods of Lithuanian exports Source: Statistics Lithuania.

  19. Machinery and equipment is the most traded good between Kuwait and Lithuania Source: Statistics Lithuania, calculations of SEB Bank.

  20. Main foreign direct investment come from Scandinavia and neighbouring countries Sectors with largest investment from respective country Source: Bank of Lithuania.

  21. Lithuanian banking sector • 9 commercial banks, 6 subsidiaries of foreign banks. • Highly concentrated – three largest banks own 67.6% of total assets in the banking sector. • Five largest banks are controlled by Scandinavian capital (SEB, Swedbank, DnB Nor, Nordea). Source: Association of Lithuanian Banks.

  22. Interest rates in Lithuania are almost equal to those in euro zone Source: Bloomberg.

  23. Real estate market: rents and prices Monthly rent in February 2008 (EUR/m2) Average price of apartment in February 2008 (EUR/m2, new construction) Source:Ober-Haus,Lithuanian Development Agency, SEB Bank’s calculations.

  24. Why Lithuania is an attractive place for doing business? • EU and NATO membership, providing guaranties for economic and political stability; • Strategic position of a “bridge” between Western and Eastern Europe and membership in Schengen area; • Highly skilled labour force; • Labour costs still several times lower than in Western Europe; • Transport infrastructure is one of the best in Central and Eastern Europe; • Strong positions in advanced technologies (lasers, biotechnology).

  25. Thank you for your attention!

More Related