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Thursday, 25.04.2024, 07:03
Comparison of the Baltic States' exports
In 2016, exports of services and goods accounted
for 58%, 80% and 74% of GDP in Latvia, Estonia and Lithuania respectively. In
this respect, Latvia historically falls behind both neighbouring countries, and
its recent growth has not helped Latvia to catch up with Lithuania and Estonia.
In 2016, the large difference between Latvia and Lithuania was mainly due to
re-exports (see the Chart).
The market share of Latvia's exports of goods in
global imports is expanding at a faster rate than that of the other Baltic
States suggesting an improvement in Latvia's competitiveness. However, the
volume and the value of goods exported from Latvia are still lower compared to exports
from Estonia and Lithuania. In 2016, almost two thirds or 29% of all goods
exported from Latvia were sold in its neighbouring Baltic States, i.e. Estonia
and Lithuania, while the share of goods exported from Lithuania and Estonia to
the other Baltic States only accounted for 15%. In the course of the last
decade, Lithuania, Estonia and Russia have been Latvia's major export partners.
The adverse impact of Russia's sanctions and of its weakening demand on
Latvia's exports decreased, as it was gradually offset by businesses
penetrating new markets. As a result, the share of Latvia's exports to Russia
declined. The top three destinations of Estonia's exports are Sweden, Finland
and Latvia, while the major export partners of Lithuania are Russia, Latvia and
Poland.
Machinery and transport vehicles and their parts
account for the largest share of the Baltic States' exports. However, this
commodity group constitutes a significantly larger share in Estonia's exports
and GDP in comparison with Latvia and Lithuania. Latvia's exports of goods
mainly differ from those of Estonia in terms of the share of machinery in total
exports, whereas from those of Lithuania in terms of the share of mineral
products and products of the chemical industry.
Although the share of high-tech products in
Latvia's exports has increased in recent years, it still falls behind the
respective share in Estonia's exports. High- and medium-tech products account
for 40% of Estonia's total exports; meanwhile, these products constitute less
than one third of Lithuania's and Latvia's total exports. Products which
undergo little processing still account for a significant share of Latvia's
exports.
In 2016, the share of exports of services was
similar in Latvia and Lithuania representing 17% of GDP, while the services
exports of Estonia constituted 26% of GDP. IT services, telecommunication
services and other business services have been the fastest growing services
sectors in the Baltic States over the past few years. Transportation services
play a major role in exports of all three Baltic States. Besides, a
characteristic feature of Latvia's exports of services is exports of financial
services. In addition to that, although the contribution of financial services
to Latvia's exports of services is modest, it is still significantly larger
than in the other two Baltic States. Meanwhile, Estonia outpaces the other
Baltic States with respect to travel services, business services and
construction services. Lithuania, in turn, clearly holds the leading position
with respect to transportation services. In the post-crisis period, the share
of Latvia's exports of transportation services in global imports has declined
year by year, whereas the respective share of Lithuania's exports has increased
sharply. The market structure of Latvia's and Lithuania's exports of services
is more diverse compared to that of Estonia exporting almost one third of its
services to Finland.
The differences in the structure of exports of
goods and services and in the choice of cooperation and trade partners can be
largely explained by historical reasons, the geographic location and the
neighbouring countries of each Baltic State, as well as by their success in
drawing investment to ensure the development of manufacturing and services
sectors and facilitate long-term economic growth.