In the first half of 2023, export prices grew by only 1 per cent, one of the main reasons being falling energy prices. “In the first quarter of this year, export prices were still rising by 6 per cent, but in the second quarter they were already down by 5 per cent. It is therefore very likely that we will continue to see a decline in export prices in the second half-year, and that prices may have a negative impact on the annual export results,” says Jonė Kalendienė, Head of Research and Analysis at Innovation Agency Lithuania.
The biggest negative impact on the value of exports of goods produced in Lithuania was caused by the chemical and pharmaceutical industries, where exports fell by 45.1 per cent. According to Ms Kalendienė, this was due to problems in the manufacturing plants of fertilisers and related chemicals, as well as to a high comparative base, as exports of fertilisers and related chemicals were the main contributors to the growth in the export results of the previous year. The global changes in the pharmaceutical sector following the COVID-19 pandemic are also having the same effect on the export decline in this sector. The wood and paper industry (-18.7 per cent), the furniture industry (-10.2 per cent) and the tobacco industry (-11.5 per cent) contributed to the export change to a lesser yet negative extent. Exports from the petroleum industry continued to grow rapidly (15 per cent). Exports of engineering products also showed a positive development (5.6 per cent). “The high- and medium-high-tech products produced by this sector are not very sensitive to fluctuations in demand, and in the context of the war in Europe, their demand in the military industry, which is often financed by the public sector, is high,” says Ms Kalendienė.
In terms of markets, in the first half of 2023, the main export destinations for products of Lithuanian origin were Poland, Germany, the Netherlands, Latvia and the USA. The difficulties of the German industry mainly contributed to the decline in exports, leading to a 16.7 per cent drop in exports of goods of Lithuanian origin to that country.
According to the May 2023 forecast, the European Commission predicts a very slow growth for Germany this year, and the downward trend in exports is likely to continue until the end of the year. Although the US is forecast to experience a faster economic recovery, Lithuania’s exports of chemical products to this country have halved in the first half of 2023 (52.8 per cent), which is largely responsible for the decline in exports in this direction (-13.9 per cent).
In the context of the war in Ukraine, exports of goods of Lithuanian origin to the aggressor countries Russia and Belarus have been declining. Exports to Russia were 55 per cent lower (-EUR 59.5 million) than in the same period last year, while exports to Belarus were 7.7 per cent lower (-EUR 3.1 million). Meanwhile, the value of exports to Ukraine grew by 118.9 per cent (EUR 226.5 million), and it was the Ukrainian market that mostly contributed to the growth of exports of goods of Lithuanian origin.
In the first half of 2023, the value of re-exports grew by 10.1 per cent, compared to the same period last year. In terms of markets, the main destinations for re-exports were Russia, Latvia, Belarus, Poland and Estonia. In the first half of 2023, compared to the same period last year, the value of re-exports to Russia slightly decreased (-EUR 33.5 million), but the value of re-exports increased significantly to the following countries: Belarus (EUR 542 million), Central Asian countries such as Kazakhstan (EUR 193.4 million), Kyrgyzstan (EUR 251.6 million), Uzbekistan (EUR 82 million), as well as Turkey (EUR 74.4 million), Armenia (EUR 66.5 million) and Sakartvelo (EUR 51.7 million). Thus, in the first half of 2023, the change in the value of Lithuania’s total exports was positively influenced by the development of re-exports of goods to countries through which the sanctioned goods enter the Russian market.
According to the analysts of Innovation Agency Lithuania, taking into account the scenarios of the European and global economic development in 2023, the downward trend in the export of goods is very likely to continue until the end of the year.
