By the Embassy of the Republic of Lithuania in the Federal Republic of Germany
This year marks 30th anniversary since the reestablishment of diplomatic relations between Germany and Lithuania. To mark this occasion, German-Lithuanian Economic Forum took place on 31 May. In many aspects, it was the largest and the most successful bilateral event of this kind in history. While German-Lithuanian economic cooperation has been steadily growing over the last decade, the Forum aimed to identify and provide guidelines for further expansion of economic ties in fields like life science, IT, smart economy, production and others. Art the backdrop of the Forum, let us have a quick overview of the Lithuanian economy and the business potential it has to offer.
A story of resilience and farsightedness
Agile and quick-to-adapt are the words best describing Lithuania in the 21st century. The country is small and flexible, and some would even compared her to a scrappy startup. Interestingly, this scrappiness has helped to soften the blow of the pandemic, making Lithuania one of the least impacted countries in Europe. Quickly adapting to new currents and trends, Lithuania provides the perfect launchpad for a number of industries, including fintech, life sciences, automotive and other sectors crucial for the modern European economy.
Recovery in progress
Despite the pressures of the COVID-19 pandemic, Lithuania managed to hold on pretty well, posting a mere 0.9% GDP contraction last year. Forecasts for this year are overwhelmingly positive, with the European Commission projecting a 3.8% increase.
A digital playground that leads to concrete results
The country found many ways of encouraging innovation, applying a “sandbox” approach wherever possible. This resulted not only in clocking more than 1000 startups last year, but most notably, in the emergence of Lithuania as Europe’s prime Fintech hub. Today the country is second only to the UK, when it comes to licensed Fintech companies. In addition, such financial technology heavyweights as Revolut, SumUp and Transfergo all benefit from Lithuanian branches that help develop their products and move their businesses forward.
Breakthroughs in life sciences
While Lithuania is often dubbed as a powerhouse for fintech and laser technology, it is important to emphasize that life sciences are among the country’s fastest-growing and most productive industries. The pandemic shed additional light on this sector, with Lithuania-based companies coming up with multiple solutions addressing coronavirus-related problems. For example, Vilnius-based Lithuanian company Northway Biotech developed, in cooperation with its Swiss colleagues, an anti-coronavirus drug, which is currently undergoing clinical trials in Switzerland.
Last year Lithuania’s biotechnology sector grew by almost 87%! The sector generated close to €2 billion and contributed around 2.5% to the country’s GDP. With biotechnology and life sciences gaining firmer ground, the Government has set a goal to increase its GDP share to 5% by 2030.
An essential cog in Europe’s automotive machine
Just a decade ago, Lithuania was barely on the automotive map of Europe, but today there is no denying that the role it plays in the industry is growing. The major shift was brought about by two German automotive giants who, interestingly enough, set up on adjacent land lots. German giant Hella launched its factory in Kaunas Free Economic Zone (FEZ) in 2018, whereas a year later Continental opened its manufacturing facility next door.
Manufacturing, including automotive, will certainly be among the sectors helping Lithuania grow and thrive in the post-pandemic world. The manufacturing industry is already responsible for generating over 20% of Lithuania’s GDP, with almost 500 foreign-owned enterprises operating in the sphere. This number is bound to increase due to the latest legislation that provides a 0% corporate tax for the first 20 years of operations to companies that invest more than €20 million in capital expenditures.
With a recognizable position in the world’s economy, Lithuania seeks to take on new challenges in financial technology, cyber security, life sciences and other sectors that will shape up the future. Offering cutting-edge solutions to problems that are local and global, Lithuania aims to be a catalyst for change with openness and willingness to tackle global challenges, co-create and grow.
For further information
Embassy of Lithuania in Germany (HE Ambassador Ramūnas Misiulis): http://de.mfa.lt