According to the latest economic survey by the United Nations Economic Commission for Europe (UNECE), Lithuania’s economy will grow by 5.8% this year – well ahead of the average for global and EU economic development.
The UNECE says that economic growth should remain strong in central Europe and the Baltic states (EU8) at 4.6%, while the average annual rate of expansion of the global economy is forecast to be 4.25% in 2005. For the euro area, real GDP will be some 1.8% in 2005. The average annual rate of economic expansion in the EU (EU25) will be 2.2% this year.
The status of Lithuania’s wood industry is perhaps best described by its foreign trade. Timber exports fall into three categories: furniture, raw materials and other wood products, and paper. In the past five years, export revenue has more than doubled from €380m to €870m in 2004. The fastest growing export products are furniture and furniture components which account for 45.3% of timber exports.
Export markets
Lithuania’s main export markets are Germany, which bought 18% of timber exports in 2004, Sweden (14%) and the UK (12%). However, Lithuania also receives imports from its eastern European neighbours – furniture from Poland, and roundwood and sawnwood from Russia and in these two areas there is a positive trade balance.
Lithuania’s foreign markets are widening, especially for furniture which is benefiting from adding value. Last year 65% of furniture exports went to Sweden, the UK, Germany, Denmark and France. It is a similar pattern for sawnwood products.
Privatisation of Lithuania’s forests continues, based not so much on economic concerns as on the restitution of property. In fact, privatisation is creating some economic problems as many owners are not ready to exploit their resource. In addition, as the number of owners has increased, the size of each forest has decreased and now 55% of owners’ forests are less than 5ha. Many of the forests are managed inefficiently but a €6.4m grant from the EU is helping to educate owners and improve forest management. Only just over half – 56% – of Lithuania’s roundwood goes to the timber industry; the remainder is used for biomass plants, which are encouraged through EU funding.
Lithuania’s annual harvest exceeds 6 million m3 and is forecast to grow. Timber imports are unlikely to increase significantly, although some Lithuanian companies are securing wood supply by establishing bases in Russia, Belarus and Ukraine.
