Our comprehensive assessment of Lithuania's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Lithuania, as well as the latest industry developments that could impact Lithuania's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Lithuania before your competitors.
Lithuania Country Risk
Lithuania will enjoy accelerating real GDP growth in 2016 and 2017, as real wage growth boosts consumption, and a stronger regional outlook improves foreign trade. Alongside an extension loose monetary policy and quantitative easing, this will encourage a recovery in investment.
Lithuania's budget deficit will increase in 2016 as expenditure growth outstrips revenue collection for the second year running. This deficit will nonetheless remain sustainable thanks to a general adherence to fiscal prudence and a low public debt burden.
Lithuania will record small but manageable current account deficits in 2016 and 2017 as a higher rate of investment requires an increase in imports from abroad. The gradual easing of EU sanctions against Russia will see both imports and exports rise over our short-term outlook. The deficit will...
Lithuania Industry Coverage (9)
BMI View: We believe that the combination of a strengthening economy and greater demand for passenger cars will lead to further growth in the Lithuanian new vehicle sales market in 2016. We are targeting over 11% growth for the sector as a whole, with passenger cars set to outperform commercial vehicles.
|Passenger Car And Light Commercial Vehicle Sales|
|f = BMI forecast. Source: ACEA, BMI|
Food & Drink
Lithuania Food & Drink
BMI View: In 2015, total food consumption in Lithuania increased by 3.6% y-o-y and stood at EUR4.0bn. In line with the improving economic outlook, we forecast total food sales to accelerate steadily across our forecast period, registering a compound annual growth rate (CAGR) of 4.8% between 2014 and 2019. Dairy, pasta and fish products are set to outperform relative to other industry segments, while meat and snack foods will experience only marginal growth. As economic conditions are gradually improving, opportunities for premiumisation will reappear.
Headline Industry Data (local currency)
Per capita food consumption growth in 2015: +3.6%; compound annual growth rate (CAGR) 2014-2019: +4.8%.
Alcoholic drinks sales value growth in 2015...
Lithuania Freight Transport
BMI View: The slowdown in Lithuania's economic growth is forecast to come to an end with accelerated economic growth in 2016 and 2017 especially. The Ukrainian crisis and consequently softer external demand has been hurting the Lithuanian economy, impacting all freight transport sectors. Trade wars between the EU and Russia have slowed growth numbers for Lithuania's imports and exports, but with improving trade conditions and domestic demand increasing, we have a more positive outlook for Lithuania over the next few years.
As the Ukrainian crisis lingers, external demand from Lithuania's main trade partners has diminished, slowing down the economy. However, with growing domestic demand, Lithuania's economic growth is expected to accelerate in 2016 reaching its growth peak in 2017 before rates even out again. In 2016,...
BMI View: Despite a slowing and muted construction industry growth picture, we do not expect any major fluctuations, and while steadiness may not spell a market with abundant opportunity, investors can be assured of Lithuania's position as an attractive investment destination, owing to its EU membership. The EU is investing heavily across the Baltic region in energy and transport corridors to diversify energy supply and improve business ties.
Growth in Lithuania's construction industry will slow drastically by 2025, when we forecast a 0.3% contraction, from 14.3% in 2014 and 6.5% in 2015, as the small market matures and EU integration projects complete.
Over the next decade, we foresee annual average residential building growth of only 5.8%, as demand ultimately slows, with...
BMI View: Although small, Lithuania's burgeoning insurance market offers healthy growth potential. Both the life and larger non-life sectors are expected to see premiums rise by the end of the current forecast period in 2019, recovering well from a short-term currency movement led contraction in 2015. The market is home to a number of well-established regional insurance providers which are well placed to take advantage of growing distribution channels and will continue to achieve growth through the introduction of a greater range of products. The large insurance firms will be able to manage increasing capital requirements following the introduction of the Solvency II regime, though we may see some smaller players priced out of the market which gives scope for entry into the market via local...
Lithuania Medical Devices
BMI View: Lithuania represents a small medical device market with potential for expansion. Entry to the eurozone in January 2015 and government commitments to improving healthcare provision are expected to contribute to growth. Accordingly, we forecast that the market will record a 2014-2019 CAGR of 4.4% in US dollar terms, ranging from 2.0% for orthopaedics & prosthetics up to 6.8% for dental products.
|Total (USDmn)||Per Capita (USD)||Total (Local Currency mn)||Per Capita (Local Currency) ...|
Pharmaceuticals & Healthcare
Lithuania Pharmaceuticals & Healthcare
BMI View: Lithuania's pharmaceutical and healthcare market represents a modest prospect for investment from multinational firms. Increasing demand due to a rising burden of chronic disease will translate to an increase in sales; however, fiscal policies and the small size of the market will limit revenue earning opportunities.
Headline Expenditure Projections
Pharmaceuticals: EUR616mn (USD677mn) in 2015 to EUR638mn (USD682mn) in 2016; +3.6% in local currency terms and 0.7% in US dollar terms. Forecast unchanged from Q116.
Healthcare: EUR2.15bn (USD2.37bn) in 2015 to EUR2.20bn (USD2.35bn) in 2016; +2.0% in local currency terms and -0.8...
BMI View: New 4G licensee Telecentras launched its LTE network in November 2015. It enters a saturated market, one that is already well advanced along the 3G migration path and where 4G uptake is proceeding swiftly. If it leverages its wireline voice/broadband and TV networks, Telecentras could pose a substantial threat to leading multi-play provider TEO . This will put even greater pressure on mobile-only Tele2 and Bite, forcing them to acquire or be acquired by wireline operators.
|3G/4G Migration Outpaces 2G Decline|
|Lithuania Mobile Market Forecasts|
BMI View: We continue to hold a broadly positive outlook for the Baltic countries' tourism sectors in 2016 and beyond. While these markets will continue to suffer the effects of political and economic turmoil in Russia and Ukraine, this will not prevent further robust growth in tourist arrivals. We expect growth to be supported by increased intra-Baltic and wider European tourism on the back of improving economic conditions across the continent. Of the three Baltic countries, we maintain our view that Latvia and Estonia will see the strongest arrivals growth over the next few years, averaging around 5-6% annually.
Key Updates & Forecasts
The Baltic region's tourism sector will continue to grow at a healthy rate in 2016 with visitor arrivals in Estonia, Latvia and Lithuania...