2020.08.20 08:00

Will Lithuanian businesses suffer from unrest in Belarus?

Jonas Deveikis, LRT.lt2020.08.20 08:00

Lithuania could lose a significant share of foreign tourists and cargo going through the port of Klaipėda if unrest continues in Belarus, which is the country's seventh largest export partner.

“Any disturbance in Belarus can affect the economy. [Belarus] is an important partner of Lithuanian Railways and Klaipėda port,” Lithuanian Prime Minister Saulius Skvernelis said on Monday.

But economists believe that unrest in Belarus would not plunge Lithuanian businesses into a crisis, because the two countries have close economic ties only in several sectors.

In 2019, Belarus was the seventh largest export partner of Lithuania, but 25th if only exports of Lithuanian goods were considered.

Lithuania, meanwhile, was the 14th largest trade partner of Belarus, importing goods worth 782 million euros. Among all imports from Belarus, wood constituted 25 percent, oil – 15 percent, fertilisers and metals – 11 percent each.

Belarus is, nevertheless, an important partner of Lithuania’s Klaipėda port. Its authorities estimated that Belarusian freight amounts to around a third of all cargo going via the Lithuanian port.

Algis Latakas, head of Klaipėda port, said that all shipments from Belarus have arrived on schedule so far.

“We have no indications that Belarus is considering cutting shipments via Klaipėda port,” said Latakas.

Žygimantas Mauricas, chief economist at Luminor bank, also said that cutting cargo shipments via Lithuania would not be viable for Belarus.

“There is a certain infrastructure, contracts that could not be terminated without economic consequences. [Belarusian firms] don’t want to look for alternatives because they would be more expensive,” he said.

Lithuanian businesses in Belarus

Julijus Glebovas, Lithuanian commerce attaché in Belarus, told that there are 575 Lithuanian capital companies in Belarus, while 250 firms in Lithuania have attracted Belarusian investment.

According to Glebovas, Lithuanian companies have not experienced any disturbances in Belarus except for temporary internet disconnections last week that made certain payments and production management more difficult.

Mauricas noted that much greater effect could be felt in the tourism sector, who make up the largest share of Lithuania’s foreign tourists.

In 2019, more than 400,000 Belarusian tourists stayed in Lithuania overnight making it the largest tourist group in this category. Almost 600,000 Belarusians also came for day visits. According to the Lithuanian Department of Statistics, they spent over 130 million euros in the country.

According to Aleksandr Izgorodin, chief economist at SME Finance, the greatest risk to Lithuania is in the area of imports.

“We are net importers from Belarus. […] We import a lot of materials, such as wood and metals. If certain Belarusian firms went on strike, Lithuanian companies would not receive materials necessary for production and could fail to meet their contracts,” Izgorodin explained.

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