During the first half of this year, Lithuanian exports shrank 2.4% compared to the corresponding period last year. Because of slow economic growth in Europe, exports to EU countries fell 4%.
The Brexit referendum caused fear and reduced trade volumes with the United Kingdom. Falling oil price might continue to hinder the growth of consumer goods prices, and Brexit will increase export competition in Europe, forcing Lithuanian exporters to expand into new markets, says DNB bank analyst Povilas Stankevičius .
Exports to EU countries, which account for nearly 62% of Lithuania’s total exports, are shrinking. The transitional period before EU funds reach the economy also influences the situation, as businesses delay investment projects, reducing the need to import raw or building materials.
Export expansion to new and distant markets gives some cause for optimism, Stankevičius says. During the first half of 2016, exports to the United States increased by over 30% and it amounted to 5.6% of Lithuania’s total exports. At the same time, there is still very little trade relationship with China, which nonetheless is gaining momentum.
Although distant business and trade relationships are not easy to establish, prolonged stagnation in Europe will encourage to look for trade partners even further afield, Stankevičius believes.