MAIN ECONOMIC AND SOCIAL INDICES FOR THE YEAR 2014 AND PRESUMPTIONS FOR THE FUTURE
Klaipėda today is one of the most successful municipalities in Lithuania, an administrative centre of industry, business, education and culture.
GDP of the Republic of the year 2014 was 36 444, 4 million EUR as per pricing of that period, Klaipėda district contribution amounted to 4 287,8 million EUR.
Regional GDP mln. Eur, regional GDP for one inhabitant, thous. Eur, data of 2014:
Major impact for the growth of GDP was made by construction, industries, wholesale and retail trade. The most significant value added was created by construction sector. Main contribution of Klaipeda district was as follows:
Source: Department of Statistics (31 December 2014)
Annual deflation has been registered
Annual 0,3 % deflation has been registered in 2014 in Lithuania. Consumer prices went down by 1,1 %, prices of services went up by 2,4 %. Annual deflation is random as it has been registered only twice since the year 1991, e.g. 2002 deflation was 1 % and in 2013 it was 1,3 %.
Average annual inflation as calculated according to the consumer price index made 0,2 % and it was by 1 percentage less than in the year 2013 and by 0,4 percentage less than in the European Union (EU).
Annual deflation in the year 2014 was mainly influenced by 5,7 % cut-price of transport goods and services, 3 % off communication goods and services, 0,7 % off accommodation, water, electricity, gas and other fuels, and also by increased prices of alcohol, tobacco by 4 %, hotels, cafes and restaurants by 3,5 %, healthcare goods and services increased by 1,8 %.
State and Municipal regulated prices decreased by 2,1 % in 2014, and market prices increased by 0,1 proc. Prices of real property have raised by 6,8 %, construction costs have increased by 1,7 % if compared to the same period in the year 2013.
The sale prices of producers of industrial products decreased by 10,4 %, the prices of products sold in the Lithuanian market decreased by 8,3 %, the prices of products sold out of the Lithuanian market by 12 %. Refined oil products excluded, the prices of the industry production decreased by 3,4 %, in the Lithuanian market – 5,9 %, outside the Lithuanian market – 0,8 %.
The decrease in prices of export and import of goods has also been registered in the year 2014.
Export of Klaipeda district
As it has been stated by public body “Versli Lietuva”, value of Klaipėda district export made 2,1 milliard EUR and it increased by 27,7 % since the year 2010. Klaipėda district has significant impact in foreign trade as export value for one employed person made 13,2 thousand EUR and it was the second result in the state. Essential driving effects of Klaipėda district export is interrelated with foreign direct investment (FDI) in production sector, developed activities in free economic zone and very strong orientation towards foreign markets (for example major tobacco factory in Lithuania sells all its production in foreign markets). Klaipėda district is also in the second place according to the share of that small and medium size enterprises create and this is due to their specialisation for trade and active transit and re-exports activities related to the seaport.
More than 50 percent of all exports in Klaipėda district is being generated by primary forms plastics production (chemistry sphere), furniture and wood processing and tobacco (in the year 2014 values achieved made accordingly 474,1, 373,5 and 361,1 million EUR). During the latter five years export of tobacco industry increased twice by reaching 102,7 % development); development indices of furniture and wood as well as of primary plastics reached accordingly 58,8 % and 2,1 %. Rather significant part of export (5 %) is generated also by food and drinks, engineering and metal industries.
Unemployment rate decreased during the latter years. In 2014 it made 7,4 percent.
Employed inhabitants of Klaipėda made 81,4 % in the year 2014, if compared to the year 2010 the number of employed people was 77,9 %.
Entrepreneurship situation and number of SME (small and medium enterprises)
Enterpreneurship situation is constantly getting better, the number of small and medium enterprises increases and it has been registered 5290 in the year 2015. 33,8 small and medium enterprises are counted for 1000 inhabitants.
Average monthly salary rate (gross) in Klaipėda made 722,6 Eur in the year 2014. Average monthly rate in the state was 677,4 Eur.
Decrease of inhabitants by 21,6 thousand
It has been registered 2 million 922 thousands of inhabitants as of end 2014 (decrease in the number made 21,6 thousands of inhabitants or 0,7 % less than end of 2013) in Lithuania.
This was due to negative international migration (emigration was more intense than immigration by 12,6 thousand of people) as well as because of negative natural alteration of people.
Prepared on the basis of data of the Department of Statistics and of Versli Lietuva.
Macroeconomic forecast (15 December 2015)
The Bank of Lithuania provides the outlook for economic development four times per year and submits it to the public. These projections show the development of main macroeconomic indicators – inflation, gross domestic product, unemployment level, current account balance, etc. over short term and medium term.
Compared to the past few years, the pace of Lithuania’s economic growth has roughly halved this year, primarily due to the downside effects of the international environment. Stubbornly low prices for energy commodities and continuing economic sanctions have dragged down economic activity in Russia and in the countries with economic and financial ties to Russia. Real GDP is presumed to have contracted by approximately 4 per cent in Russia this year and the health of other CIS economies has also taken a noticeable turn for the worse. A substantial fall in these countries’ imports and depreciated currencies act as a drag on the performance of Lithuania’s transport, storage and wholesale undertakings involved in re-export operations in particular as transport of freight to the Eastern countries accounts for a significant part of services provided by these businesses.
Even so, export dynamics are not too grim. Real merchandise exports only fell slightly as compared to last year when Russia’s economic downturn started to take hold. The decline in exports to the Eastern countries is offset to a large extent by the growth of exports to other countries, in particular the EU, which is driven inter alia by improvements in economic well-being in the European countries and by exporters’ efforts to discover new markets. It is noteworthy that the real exports of services continued to increase. A decline in eastward exports of transport services, which represent a large share of the total exports of services, was accompanied by an increase in such services provided to other countries, which mitigated the effects from the changed international environment.
The international context is not the only factor behind the softer performance of the economy. In particular, the pace of growth in the construction sector has slowed down this year. The annual rate of growth in the value added created in this sector almost halved in the first half of this year, from approximately 14 per cent recorded last year. The slowdown is due to infrastructure and non-residential construction, which has stopped growing. Home construction is the only segment to show sizeable growth. Investment in residential buildings, unlike investment in other construction facilities, has already recovered to the pre-downturn level. However, this investment also remains surrounded by some uncertainty. The growth of activity in the housing market is likely to moderate from the pace observed in recent months and the supply of newly built homes is relatively abundant. Less intensive development of residential investment would further dampen activity in the construction sector.
As in the past few years, private consumption continues to underpin economic growth. The labour market has remained immune to the slowdown in the country’s economic development. Employment in transport and trading enterprises, i.e. in the economic entities that have been hardest hit by the economic downturn in Russia, has lost its previous growth pace but is not falling, either. Elsewhere in the economy, jobs are growing significantly in number. Hence the demand for labour has not decreased, which has a positive effect on wage dynamics. With the number of vacancies climbing and unemployment falling, wage growth, which is also supported by the increase of the minimum monthly wage, continues broadly unchanged from last year, which paves the way for households to step up consumption. The growth of consumption is rather strong, despite continuing uncertainty over the country’s economic outlook, which has been getting gloomier for quite a while.
Domestic demand is expected to keep growing at a robust pace in the forecast period. However, the pace of economic growth will still remain affected by the external environment. Foreign demand, i.e. the imports of trade partners, is forecast to rebound in 2016 after this year’s fall hence the growth of Lithuania’s exports should pick up somewhat next year. Expected improvements in the international environment should also lead to faster growth of the entire economy. Lithuania’s real GDP is projected to grow by 1.7 per cent in 2015 and by another 2.9 per cent next year. The forecast of economic growth in 2016 has been revised down (from 3.2%) due to a more cautious approach to the outlook for the international environment and, in particular, Russia’s outlook. Downside risks to Lithuania’s economic growth continue to mount amid lingering uncertainty over Russia’s economic development and concerns about the growth outlook in other emerging economies. Weaker than expected global economic growth would have negative implications, both direct and indirect, for the growth of Lithuania’s economy as it would lead to a worsening of the outlook for economic growth in foreign trade partners.
Trends in prices remain favourable for consumers. Annual inflation has been negative, i.e. prices have been lower than their year-earlier levels, since the end of 2014. The year 2015 is coming to an end and it is therefore obvious that the average annual inflation rate this year will also have a negative sign and is projected to be –0.6 per cent. The fall in prices this year has mainly been driven by prices for energy, in particular fuel, which have tumbled, pulled down by the slump in crude oil prices late last year and early this year. Annual inflation should return to positive territory in the near future as the base effect from the previous fall in crude oil prices fades out. However, inflation next year should be low given the continued environment of low inflation and will therefore have virtually no eroding effect on household purchasing power. In 2016, the average annual inflation rate is projected to be 1.4 per cent. In particular, the upward trajectory of non-energy prices will not be steep while prices for energy may continue to fall, albeit at a much slower pace than this year.
Outlook of Lithuania’s economy in 2015–2016
aThese projections of macroeconomic indicators are based on information made available by 13 November 2015.b Projection
c Adjusted for seasonal and workday effects
d National accounts data; employment in domestic concept