Lithuania losing position as key re-exporter to East

DELFI / Kiril Čachovskij

With geopolitical tensions between Russia and the West sharply escalating and the Russian economy slowing down, Lithuanian re-exports in 2015 retreated 10%, and in January this year they dropped by a further 5%, said Rokas Grajauskas, Danske Bank’s chief economist in the Baltic countries.

Re-exports to Russia amounted only to 21% of total re-exports in January this year compared to 43% of the total in 2014.

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Lithuanian entrepreneurs have been exporting Western technology and equipment, used cars, other vehicles, as well as a variety of foods to Russia and other CIS countries (17% of the total in 2014).

For many years, re-exporting accounted for a growing part of Lithuania‘s GDP, but since the economic crisis in Russia hit, Lithuania has been losing the business of re-exporting goods from the Western Europe to Russia and other CIS countries, said Grajauskas.

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The transit sector accounted for 12% of Lithuania’s total GDP growth between 2005 and 2014, and employs about 80,000 people in Lithuania.

Re-exports started to grow dramatically in 2006. In 2005 re-export accounted for only 22% of total exports but that figure had grown to 43% by 2014.

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Looking to the future, Grajauskas said the winners will be those who will be the quickest to establish themselves in new markets. Lithuanian wholesale trade and transport companies will no longer be merely be an intermediary between the West and the East, but will increasingly participate in direct competition with local carriers in Western European markets.

Lithuania is one of the top re-exporting or transit countries in the world along with Singapore, Luxembourg and Ireland, and far ahead of neighbouring Baltic States, Latvia and Estonia on this measure.

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