According to the International Monetary Fund’s (IMF) latest economic analysis, Lithuania has successfully transitioned from an emerging market into a mature economy. As such, the Baltic country is now considered to be in the same economic category as countries like Germany, the USA and Japan. The IMF classifies a country’s economy based on its per capita GDP, its export diversification and its degree of integration into the global financial system. The IMF expects Lithuania’s GDP to grow by 2.8% this year and by 3.2% in 2016. By contrast, the organisation has forecast Eurozone GDP growth rates of 1.5% for 2015 and 1.6% for 2016. According to the IMF, these figures indicate that Lithuania no longer belongs in the category of emerging markets which includes the BRICs (namely Brazil, Russia, India and China).
In another piece of good news for the rapidly developing country, Lithuania climbed 6 spots to 28th place (out of 144) in the IMD’s annual World Competitiveness Ranking and now leads the CEE region. The World Competitiveness Ranking is an annually published index that evaluates business conditions across the globe. Lithuania scored especially highly in the rankings in the fields of education and technology.
These impressive developments are the result of substantial economic and financial reforms the country has put through in recent years. At 2.6% of GDP, its fiscal deficit lies within the EU threshold of 3%, whilst its national debt of 39% is comfortably under the limit of 60% and way below the current EU average of 90%. The introduction of the Euro at the start of this year has also given the country an economic boost. With the removal of foreign exchange risks and exchange costs, the country expects an increase in investment and business activity from international companies.
Foreign direct investment in Lithuania is already high, totaling more than 12 billion Euros. According to a study conducted by the German Chamber of Foreign Trade, 10.3% of this total has come from German companies. After Sweden and the Netherlands, Germany is the largest direct investor in the Baltic country. The German Federal Foreign Office states that around 1,200 companies, including the likes of Lidl and Schmitz Cargobull, are registered in Lithuania with German capital. Lithuania is an attractive location for investors thanks to its combination of low corporate tax levels (which are between 5 and 15%), cost competitiveness (salaries for highly-skilled employees are about 20% of the average in Germany) and its strategic geographical location between Western Europe, Scandinavia and Russia.
Read full article in German at mittelstand-nachrichten.de
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