VILNIUS - Just six months before joining the European Union, Estonia, Latvia and Lithuania have received new recognition for their booming economies.
In growth forecasts published by the European Commission in Brussels last week the three Baltic countries raced ahead of the pack, outstripping existing EU nations and the other seven future members with their growth prospects.
With the highest predicted numbers in the region, Lithuania is marked in the forecast for 6.6 percent GDP growth this year, on the back of what the EU executive called "buoyant investment."
Growth is anticipated to continue at 5.7 percent next year and 6 percent in 2005.
"The Lithuanian economy could be compared with a late spring," said Gitanas Nauseda, an analyst and adviser to the president of Vilniaus Bankas, the country's biggest bank.
"In 1999-2000, when neighboring Estonia and Latvia were heading forward, Lithuania was slowly recovering from the effects of the Russian crisis. But this period was not wasted. Companies were modernizing and preparing for challenges and now we have a result," said Nauseda.
"The main steps that built a backdrop for a boost in the Lithuanian economy were made a few years ago," said Ruta Vainiene, vice president of the Lithuanian Free Market Institute.
"First of all there was a tax privilege on reinvested profits, which allowed and encouraged companies not to spend their profits but to modernize and build up their capacities. Now we see the fruit of these investments," she explained.
Experts have also pointed to the privatization process as a key factor in the region's economic development.
Prudent budgetary planning also played a significant role. "On top of all this we should note the strict fiscal policy, which helped to stabilize the situation after the Russian crisis," Vainiene said.
Lithuania saw GDP growth of 6.7 percent last year, with its economy growing 8.1 percent in the first nine months of the year, according to preliminary figures. Unemployment in September dropped to 9.3 percent of the workforce, the lowest in four years. Consumer prices dropped by 1.9 percent over eight months, after 1 percent deflation in 2002, while industrial production increased by 15 percent over the first nine months of the year, compared with the same period of 2002.
There was similar good news for Latvia and Estonia.
The European Commission forecast the Latvian economy would grow 6 percent this year, 5.2 percent next year and 5.7 percent in 2005, while Estonia would see growth of 4.4 percent in 2003, 5.6 percent in 2004 and 5.1 percent in 2005.
"These figures are very bright for Latvia and all Baltic states. Potential of growth is very high," said Raita Karnite, a director of the Institute of Economics at the Latvian Academy of Sciences.
"A key reason is the balanced economic policy that is friendly to the entrepreneurs," said Andres Saarniit, head of the economics policy department of the Bank of Estonia.
"The budgetary policy of the Baltic states is still significantly more balanced than the average in the 10 accession countries," he said.
"By forecasting GDP growth in the coming years for the Baltic states, the European Commission is evidently counting on the continuation of the current economic policies in the Baltic region," Saarniit added.
Mario Lambing, chief specialist at the economic development department of the Estonian Economy Ministry, pointed out that although the Baltics have the highest growth rates among the accession countries, they have the lowest GDP rate per person in the group.
"The more developed the country, the slower the growth. Countries in transition like Estonia have a lot of untapped potential. Bridging the gap with more developed countries requires a lot less 'energy' than achieving high growth for the highly developed countries," he said.
