Lithuania economy leads Baltic pack

Lithuanian gross domestic product swelled by 6.7 percent in 2002, prompting national leaders to proclaim the country's economy as one of the fastest growing in the world.

Original government estimates of 5.9 percent growth for the 2002 fiscal year were revised on better-than-expected results for the last three months of the year.

"We compiled the final numbers for fourth quarter growth, which was higher than expected," said Galute Juskiene, deputy head of the national accounts division in the statistics department.

"We also adjusted our method of calculating. Whereas we used to use 1995 prices for purposes of comparison, the 6.7 percent figure is calculated using 2002 prices," she explained.

According to the report, the economy expanded on the back of unprecedented gains in almost every sector, particularly in construction, transport and finance - all of which grew more than 10 percent for the year.

2002 marked the third consecutive year of economic recovery, building on 6.5 percent and 4 percent growth in GDP in 2001 and 2000, respectively.

Businessmen hailed the revised numbers as an indicator of positive developments in the economy.

"I'm impressed by the ability of local companies to compete both at home and abroad," said Arunas Pemkus, head of Lithuania's branch of the international public relations firm Hill & Knowlton.

"Many Lithuanian firms have outgrown even the national market and are expanding beyond the Baltics," he said.

While the economies of all three Baltic states posted strong numbers last year, Lithuania beat its two northern neighbors in addition to topping all other countries in the region.

Latvia and Estonia reported 6.1 percent and 5.8 percent rates of growth, while Russia's expansion was 4.3 percent.

Regional laggard Belarus reported a 2.8 percent increase in GDP, and the Polish economy stalled in 2002, barely climbing over 1 percent.

In spite of intensive growth in the Lithuanian economy with minimal attending inflation, experts warn that there are still major problems to be dealt with.

Gediminas Miskinis, secretary of the Economy Ministry, pointed out that Lithuania had a massive current account deficit in 2002.

"Our current account deficit was about 2.4 billion litas (695.6 million euros) in 2002, or about 4.8 percent of GDP. This large deficit was only counterbalanced by foreign investment, which was about 2.7 billion litas," said Miskinis.

"We must manage to lower the deficit while maintaining foreign investment, otherwise this growth will not be sustainable in the medium term."

Some were also quick to point out that the benefits of high GDP growth were not being felt by all Lithuanians. In a special address to the Seimas (Lithuania's parliament) on April 3, Prime Minister Algirdas Brazauskas said that while Lithuanians should feel lucky to live in a country with high economic growth, many residents would have to wait a considerable amount of time before realizing personal gains.

"The growth can be felt in Vilnius, and to some extent in Klaipeda, but much less so in outlying areas, which are still relatively depressed," observed Pemkus.

Nonetheless, Miskinis was quick to assert that Lithuania was on the path to robust economic expansion in the near future.

"The internal market is developed, exports are increasing, and investment in infrastructure is receiving a large amount of attention," he said.

"We believe that these are the keys to long-term growth."