Klaipėda is the third largest city in Lithuania lying on the western side of Lithuania on the coast of the Baltic Sea. It is a regional business, education, culture, tourism and administration centre.
Historically, the city was a very import crossroad for various trade routes, as it was the place where North met South and East met West. Such an importance remains nowadays as well as Klaipėda is an only seaport city of Lithuania, a country with an external boarder of European Union and Schengen area.
Klaipėda has a multipurpose, universal, deep-water ice-free port, providing high quality services which makes Klaipėda the most important and biggest Lithuanian transport hub, connecting sea, land and railway routes from East to West.
Continuous investment in the development of the port makes it the biggest EU seaport on the Eastern coast of the Baltic sea per cargo handled.
Moreover, Klaipėda was the first city among the three Baltic States where the Free Economic Zone (FEZ) was established on the outskirts of the city in 2002.
Since then, more than 100 companies started their operations there, including the leading companies in their industry, such as Yazaki, General Electric, Heidelberg Cement, NEO Group and Indorama Ventures.
More than 600 million EUR has already been invested by the companies in the FEZ, which generated around 900 million EUR annual turnover in 2016.
This year Klaipėda’s FEZ secured five awards, including one for Quick Launch opportunities, at the Global Free Zones of the Year 2017 rankings published by Financial Times’ fDi Intelligence service annually since 2010. Klaipėda FEZ has been also recognized for its specialism in the plastics industry, contribution to the national economy, energy efficiency and expansion of its investors.
Klaipėda FEZ became the first ever and the only free economic zone to receive the Quick Launch Award from fDi Intelligence.
Investors wishing to establish an operation in Lithuania’s Klaipeda FEZ can use the zone’s Fast Factory Launch scheme. The scheme offers companies sites complete with necessary construction permits, and the ability to make minor edits to customize the site to an investor’s needs. Outside of Klaipeda, construction permits in Lithuania can take anywhere up to six months. Additionally, the Flexstart programme aims to allow investors to start operations in less than one month, with customizable pre-built manufacturing facilities. New offices are currently under construction to be offered to SMEs as part of the programme.
SOME FACTS ABOUT THE ECONOMY
Last year, Lithuania's economy was growing slower than in the past few years. Like throughout the year, in the last quarter of 2015 an unfavourable external environment was the main factor leading to slower economic development. However, this factor has not so far affected households' expectations and consumption which is the main driver for economic growth. The uncertainty in respect of the prospects of the global economic growth remains high, however, a slightly faster economic growth in Lithuania can be predicted in 2016 - it should be up to 2.5 percent - 0.6 percentage point faster than in the previous year.
Although this year's expected 0.7 percentage points slower than forecast last autumn, Lithuanian economic growth, it will continue to be the fastest between the European Union and the euro zone. The Ministry of Finance predicts for this year of 2.5 percent GDP growth, at the same time, the European Commission forecast Lithuania - 2.9 percent.
Designing a lower than expected in 2015 in autumn, 2016 GDP growth had to evaluate changes in the external environment and changes in the construction and agricultural sectors.
Exports to the European Union, the main Lithuanian foreign trade market, are consistently growing. Adaptability in redirecting exports to new markets will have an even greater positive impact on the overall annual economic growth in 2016.
Households' consumption is the brightest light in Lithuanian economy. Consumption is growing quite significantly, regardless of the persisting uncertainty in respect of the country's economic prospects. It is forecasted that the unemployment rate will continue to decline and will reach the natural rate of unemployment. This year, wages are expected to increase approximately by 5 percent, thus, given low inflation, consumer purchasing power will continue to grow.
The average annual inflation rate remains negative hence prices are lower than they were a year ago. A fall in prices was mostly determined by a decline in the prices of energy raw materials, especially oil prices. Annual inflation is likely to become positive this year, however, raw material prices having hit new lows at the beginning of the year, trends in the price fluctuations should continue to be favourable to consumers.
In 2015, retail trade volumes increased by 2.1 percent in comparison with 2014. Positive situation in labour market, i.e. decreasing unemployment and growing wages, allows us assuming that a moderate growth of retail trade should be further observed. As in the past few years, private consumption was driven by the improving labour market environment, increasing employment rates and rising wages. Decreasing unemployment (having reached 9.4 percent in 2015, it is likely to fall to 9 percent in 2016) and new emerging jobs have determined the growth of wages at a similar pace as in 2014. In addition, it was increased by the monthly minimum wage raise. Last year, wages were raised by over 5 percent. The private sector saw the largest increase in fixed wages. It was influenced by a growing demand for labour force and the need to retain qualified professionals. Next year, the macroeconomic environment should have a positive effect on consumption.
Collectively Klaipeda region's economy and business has been developing in a positive direction - decreasing unemployment, an increase in new start-ups, growing regional GDP created, increasing the average wage. By far the greatest contribution to the development of the region puts the Klaipeda port, which, after the crisis period, encouraging good handling performance and increasing cargo diversification. The successful development of the port activity not only contributes to more than 30 percent of the region's gross domestic product, but also to create a business environment more than 800 companies, whose activities are directly related to the port. The next regional engine - exporting manufacturing companies, particularly dominated by furniture manufacturers. Almost 40 percent the total exports of the region generates a company based in the Klaipeda free economic zone (FEZ).