VILNIUS (dpa) – With growth rates of between four and seven per cent last year, the economies of the Baltic states Latvia, Lithuania and Estonia were able to evade the downturn which began plaguing western Europe after the September 11 terrorist attacks.
Moreover, according to Joachim Legat, an analyst for the German bank Vereins- und Westbank, there will continue to be an “ongoing special economic upswing in the Baltic region”.Corroborating this view is an analysis of the Skandinaviska Enskilda Banken (SEB), the largest bank in Scandinavia and one now active in taking over banks in the Baltic region.“Even if the global economic downturn turns out to be worse than anticipated, the effects on Estonia, Latvia and Lithuania will remain limited,” the SEB said.For this year, economists are projecting a gross domestic product growth rate of more than four per cent in the Baltic states. At the same time, inflation will remain moderate, at less than three per cent. The boom will be supported by rising demand in the local market and by increased investments.More and more of these are also coming from Germany. Whereas in 1991 it was Scandinavian businessmen who were the first to offer opportunities to the republics after their newly-gained independence from the Soviet Union, now it is German investors who are discovering the region.A recent survey by a German business group found that around 90 per cent of the investors from Germany are highly satisfied with the Baltic region as a place to invest in.At the moment, around 1,200 companies in Lithuania are operating on capital from Germany. In Latvia it is 900 while in Estonia the figure is around 300.Most of these are small- to medium-sized firms. About one-fourth are in production, another fourth are engaged in import-export activities and about half are involved in the services industry.Typical examples of such companies are a children’s clothing company which makes caps, a general representative for frozen food products and a German-Baltic consulting company.The investors say that “good infrastructure” ranks tops in their thinking about the region, ahead of manpower, an area which is an advantageous one due to the comparatively low wages.This comes as no big surprise, given that average monthly wages are around 315 euros (275 dollars) in Estonia, 245 euros in Latvia and 220 euros in Lithuania. But the German business survey does note that in Estonia there is a shortage of skilled labour.Further points of criticism concern inadequate financing facilities for domestic or German banks and the problems in pushing a claims case in court.But all the same, around three-quarters of the German firms surveyed plan to expand their activities. They regard a pan-Baltic engagement as one holding special promise.A further incentive for western investors has just been implemented by Lithuania. By decoupling the national currency from the U.S. dollar and linking it to the euro, the currency risks have been lowered for business deals with the eurozone group.“This is a logical step since foreign trade is conducted primarily with the European Union,” Vereinsbank analyst Legat notes. “One may not expect a quantum leap (in trade), but in any event the decision is a positive one.”Amid these steps, the political and economic efforts by the governments in Riga, Vilnius and Tallinn continue to be focused on the Baltic republics’ entry into the E.U. and into the NATO military alliance. This would further underpin that tiny economic miracle now taking place in the eastern Baltic Sea region.
