I recently sat down with Arunas Karlonas, commercial attache at the Embassy of Lithuania in Israel, to discuss his insights into 2021, and his projections for 2022
<br>How has corona impacted the economy of Lithuania?
The recovery of the Lithuanian economy has been extremely rapid. According to the Euromonitor’s Recovery Index, Lithuania was one of the only three European countries whose economy recovered in 2021 and reached the pre-pandemic level, this already at the end of the first quarter. The economy recovered at a record pace despite having strict quarantine measures in 2020-2021.
Exports reached pre-pandemic levels in the second quarter of last year. The world is short of raw materials and their prices are rising, the pandemic effect is still here, however, the value of exports of goods produced in Lithuania continues to grow rapidly. This is mainly due to the increased economic activity of the EU and the US, as the main trading partners of Lithuania. Lithuania’s export growth potential is not diminished by international institutions having recently worsened the economic outlook for some of Lithuania’s important trading partners. The main Lithuanian export sectors are chemical products, engineering industry, furniture, wood and paper industry, agriculture, and the food and beverage industry.
<br>We are witnessing political tension between Lithuania and China, which is affecting trade. On the one hand growth in trade with Taiwan while a decrease in trade with China, which has withdrawn ‘Country of Origin’ status from Lithuanian manufactured goods. What is your position?
China’s actions in suspending trade relations with Lithuania are in clear violation of international trade rules and are unprecedented. Together with our strategic partners and other countries in the India-Pacific region (Australia, Japan, South Korea, etc.), various new alternatives for Lithuanian business are being sought, which will develop into sustainable cooperation based on mutual economic benefit. We also invite Israeli companies to strengthen cooperation with Lithuanian companies or invest in Lithuania.
Lithuania has repeatedly assured China that it adheres to the “One China” policy, and at the same time wants to develop cultural and economic relations with those countries and regions with which it chooses to, as a sovereign state. We and our partners have no doubt that China’s sharp reaction to restricting trade with Lithuania contravenes two key principles of the World Trade Organization (WTO): non-discrimination and transparency.
The Lithuanian government (Foreign Affairs Ministry) immediately called on the European Commission, which is responsible for implementing the European Union’s trade policy, to use all available EU instruments to address the issue, including in the World Trade Organization. The European Union, its members and Lithuania’s other strategic partners express solidarity and support for Lithuania, and recognize that China’s economic pressure on Lithuania is wrong and inappropriate. The EU’s internal market is and will remain indivisible. Responding to China’s economic violence against one of its EU members is a European matter, as it affects the EU’s single market and the EU’s common commercial policy.
<br>What are the priorities of Lithuania with respect to growth areas?
Lithuania’s goal is to export more hi-tech goods and services. The recent years have been particularly successful for the technological, electronic and optical products sector and the life sciences sector, exports of which grew in 2020 by as much as 62%! Tourism is also a very important sector. We are working hard at restarting this activity, and growing the tourist volume flow to pre-pandemic levels. Tourism from Israel is very important to us, and we are planning many activities to promote Lithuania and to attract youngsters and young families with children, city breakers, etc to visit our lovely and dynamic country.
As for the specific incentives to investors – Lithuania has a special unit, “Invest Lithuania,” which supports and guides investors. Lithuania offers many such attractive benefits as published at www.investlithuania.com. The team at Invest Lithuania is highly skilled and helps investors in finding the best solution for their desired projects or investments.
<br>How are current trade relations between Lithuania and Israel?
Israel ranked 36th in 2020 among the Lithuanian export of goods markets, with EUR 87 million in total Lithuanian export of goods. Israel also ranked 29th amongst the Lithuanian export of services markets, with EUR 28 million. We see huge potential in the areas of food and beverages, chemicals and pharma, laser and photonics, furniture industries as well as in the telecommunications, technology and information services. Lithuania is open for business! We are keen to cooperate, trade and offer attractive incentives to Israeli investors. I am ready and available to meet, speak and answer all the questions of Israeli businessmen! ■
The writer is president of the Israel-Lithuania Chamber of Commerce and Israel-Lithuania Technology Hub.