Economy of Lithuania
Lithuania is a member of the European Union and the largest economy among the three Baltic states. Lithuania belongs to the group of very high human development countries.
Lithuania was the first country to declare independence from Soviet Union in 1990 and rapidly moved from centrally planned to a market economy, implementing numerous liberal reforms. It enjoyed high growth rates after joining the European Union along with the other Baltic states, leading to the notion of a Baltic Tiger.
GDP growth reached its peak in 2007, increasing by 11.1%, and still growing slightly in 2008. Similar to the other Baltic States, the Lithuanian economy suffered a deep recession in 2009, with GDP falling by almost 15%. GDP growth has resumed in 2010, albeit at a slower pace than before the crisis.
GDP per capita in Lithuania is 70% above the world's average of $10,500. Lithuania is ranked 24th in the world in the Ease of Doing Business Index prepared by the World Bank Group and 15th out of 178 countries in the Index of Economic Freedom, measured by The Heritage Foundation. SectorsServices
The service sector accounts for the largest share of GDP. One of the most important sub-sectors is information and communication technologies (ICT). Around 37,000 employees work for more than 2,000 ICT companies. ICT received 9.5% of total FDI. 11 out of 20 biggest IT companies from Baltic countries are based in Lithuania. Lithuania exported 31% of its IT services in the first quarter of 2009. Manufacturing
Manufacturing constitutes the biggest part of gross value added in Lithuania. More than 57,000 people were employed in food processing in 2008. The food processing sector constitutes 11% of total exports. Dairy products, especially cheese, are well known in neighbouring countries. Another important manufacturing activity is chemical products. 80% of production is exported so chemical products constitute 12.5% of total exports. Financial services
The financial sector concentrates mostly on the domestic market. There are nine commercial banks that hold a license from the Bank of Lithuania and eight foreign bank branches. Most of the banks belong to international corporations, mainly Scandinavian. The financial sector has demonstrated incredible growth in the last decade (1998-2008). Bank assets were only €3.2 billion or 25.5% from GDP in 2000, half of which consisted of loan portfolio.
By the beginning of the year 2009, bank assets grew to €26.0 billion or 80.8% to GDP, the loan portfolio reached €20.7 billion. The loan-to-GDP ratio was 64%.Tourism
Tourism is becoming increasingly important for Lithuania's economy, constituting around 3% of GDP in 2008. Agriculture
Despite a decreased share in GDP, the agricultural sector is still important for Lithuania as it employs almost 8% of the work force and supplies materials for the food processing sector. 44.8% of the land is arable. On the other hand, consumption of milk and dairy products has decreased to 268 kg per capita by 21%, and the consumption of bread and grain products decreased to 114 kg per capita by 19% as well.
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