2024-07-16 06:41:05
“The first quarter of this year gave us the opportunity to speak with optimism, because it seemed that our situation was improving and it was almost 2.9 percent. growth compared to last year. However, the second quarter showed a different picture. We see a decline in exports, up to 8 percent. compared to last year, when taking into account 2022 the results weren’t the best either,” V. Janulevičius commented to “Žinių radio” on Monday.
“There is a problem with China and Asian countries dumping certain products. (…) And it’s not easy for the industry either, because wages in our country are growing the fastest in the OECD countries in 5 years. I’m not saying that compared to 2017 salaries doubled. So costs are rising because productivity is constantly lagging behind wage growth. And this pushes the industry into a situation where we cannot be competitive with Asia,” he commented.
According to the president of LPK, the decline of the industry that uses Lithuanian goods, visible in Europe, contributed to these problems. Here, the representative of industrialists will also mention the problem of competition with Asia.
“And that decrease is due to the fact that, for example, German industry shrank by 7 percentage points in the second quarter of this year. And this is highly correlated, since the largest number of goods and products go to Germany, which are used further”, said the president of LPK.
“It’s 7 percent. in Germany and 8 percent. highly correlated with us. Even the countries of the south that had such great resilience to this era of high money and slowdown. France had 4.5 percent. contraction. It is our customers who are shrinking,” he added.
According to the State Data Agency, in 2024 January-May compared to 2023 in the same period, Lithuanian exports decreased by 8 percent, imports by 10.4 percent.
V. Janulevičius: in order to compete with China and the USA, the European Union must create a common capital market
Vidmantas Janulevičius says that in order to increase competitiveness, the countries of the European Union (EU) must create a common capital market. According to the representative of the industrialists, the gradual green transformation of the Western countries, which would reduce the country’s dependence on fossil fuels from non-democratic states, would also help.
“The more that capital remains with us internally, the better access to it is within the same European Union. Therefore, it is very important to talk about the common market of the European Union, the capital market or the capital market. I mean the Eurozone. This would be an incentive for other countries to join the euro zone”, V. Janulevičius told “Žinių radio” on Monday, highlighting as an example the unevenness of access to capital in Lithuania and Poland, which do not belong to the euro zone and therefore have no restrictions.
“In 2022, the European Union spent a trillion euros on fossil fuels in Third Countries. Thank God that 50% of those third countries went to the United States for gas and to Norway. The rest left for Third Countries, which are not always democratic. If that money remained within the European Union, which is almost 7-8 percent. (…) of the gross domestic product, then in 10 years we would investigate everything ourselves and not spend that money”, emphasized the businessman.
According to the representative of industrialists, the competitiveness of Lithuanian industry in the markets of third countries is hindered by expensive access to capital, lower productivity of employees and significantly increased energy costs. Therefore, as V. Janulevičius emphasized, in order to compete with China and the USA, Lithuania must invest in innovative products.
“Or we have to produce something very unique, innovative, but it requires research, it requires investment in innovation, it requires money, let’s be honest. To sell what the Third World doesn’t have. Because we won’t get anywhere with standard goods, with so-called commodities, we are simply too expensive – because of people and their productivity,” V. Janulevičius noted.
“These are the three things that for now, unfortunately, limit our exports, and we will probably stay with the EU and the US, which should not be lost as the largest markets, so that we still maintain the balance.” It would be very good to talk about third countries, but then we have to innovate and invest a lot,” noted V. Janulevičius.
As an opportunity to increase competitiveness, V. Janulevičius singled out the EU’s gradual transition to green industry solutions in those industrial areas where dependence on fossil fuels, such as gas, remains high. According to V. Janulevičius, it would be worthwhile for Lithuania to consider parallel development of gas exchange with green hydrogen.
“We can’t run headlong. (…) Hydrogen can replace gas almost 100 percent. in any production processes, but if we are talking about sustainable, green (hydrogen – ELTA), it is quite expensive today. The transformation, the green course, must move in parallel with our gradual abandonment, so as not to undermine competitiveness”, stated V. Janulevičius.
He also believes that Lithuania should pay for the remaining indicators as soon as possible and submit applications to receive the remaining funds of the Recovery and Resilience Facility (RRF) plan, Vidmantas Janulevičius believes.
According to him, injecting this finance into the country’s market would not only revive the industrial sector, but also ensure more defense funding.
“I think we should hurry now. Because if we want to grow our defense and our budget, because the higher the GDP, the more money we allocate to both that and the people,” V. Janulevičius commented to “Žinių Radio” on Monday.
“During the pandemic, we had that money and we grew up. The same should be done now, because we see the situation of industry and economy. Because although internal consumption is pleasing, it will slow down and companies will start reducing the number of employees. To prevent this from happening, we have to inject capital now,” he added.
The president of LPK claimed that such a strengthening of the industry would mean that 3 percent from GDP, the value of defense financing, which in 2025 will amount to about 2.3 billion euros, would increase by about 200 million. euros.
ELTA reminds that Lithuania has received almost 1.36 billion from the RRF fund. EUR – 886 million EUR subsidy part and almost 470.3 million of the funds of the loan part of euros. The current value of the plan is 3.85 billion. euros (2.3 billion euros in grants and 1.55 billion euros in loans). This is almost double the value of the original economic recovery and resilience plan.
Lithuania has also turned to the OSCE, responding to the EC’s partial 8.7 million. euro sanction for the part of the Lithuanian RRF plan.
Finance Minister Gintarė Skaistė previously said that the second request for RRF fund payment to Lithuania is suspended until the parliament makes decisions related to the tax reform package. According to her, if the necessary changes are not adopted, the EC can apply sanctions.
2024-07-16 06:41:05