Macro-Economic Aspects of BALTIC Sea Rim Countries

Roshan Hemantha Alahendra Jukka VakioAzeez Oladapo Olokunola

The Baltic Rim economies continue to expand at an impressive pace. Economic progress coupled with large-scale migration in the wake of EU

entry of most countries has resulted in a sharp drop in un-employment there is even a risk that labour shortages could hamper growth notably in

the Baltic countries in the years ahead. This development seemed improbable just a few years ago. But much indicates that demand in these countries will also start to subside, reducing growth to more sustainable levels.

The anticipated global downturn in 2007 will put more pressure on exports, and the ECB’s rate hikes have an immediate effect on the Baltic countries. Al-though interest rates are still low, these trends should curb the buoyant credit growth and probably also temper the explosive surge in house prices in the Baltic region.

Estonia

Estonia is an upper middle-income country with a gross national income per capita of $9,100 in 2005

A small country of about 1.35 million people, Estonia has few natural resources and is heavily reliant on trade, with telecoms being one of its main exports.

Its GDP has grown at an average of 7.5 percent since 2001.

Estonia

Population, total (millions)     1.3    

Population growth (annual %)      -0.3       

Life expectancy at birth, female (years)     77.2       

Life expectancy at birth, male (years)     66.2      

Poverty headcount ratio at $2 a day (PPP) (% of population)  

  6.7       

GDP (current US$) (billions)     13.11      

GDP growth (annual %)     9.8       

GNI per capita, Atlas method (current US$)     9100      

Inflation, consumer prices (annual %)     4.1       

Foreign direct investment, net inflows (% of GDP)     9.3       

Unemployment, total (% of total labor force)      10.0      

Time required to start a business (days)     35       

Estonia

Latvia Latvia is an upper middle-income country with a

Gross National Income per capita of $6,750 in 2005 (GNI, Atlas method).

More than one-third of a 2.3 million population is living in the capital city of Riga.

Latvia has few natural resources and imports all of its natural gas and oil, as well as part of its electricity. The country is situated on vital east-west trade and energy transit routes. Forests cover almost 40 percent of the country's territory.

LatviaPopulation, total (millions)     2.3  

Population growth (annual %)     -0.6       

Life expectancy at birth, female (years)     77.7      

Life expectancy at birth, male (years)     65.5      

Poverty headcount ratio at $2 a day (PPP) (% of population)    

4.4      

GDP (current US$) (billions)     15.77      

GDP growth (annual %)     10.2    

GNI per capita, Atlas method (current US$)     6760       

Inflation, consumer prices (annual %)     6.8     

Foreign direct investment, net inflows (% of GDP)     5.1      

Unemployment, total (% of total labor force)     10.6       

Time required to start a business (days)     18       

Internet users (per 1,000 people)     350 

Latvia

Lithuania Lithuania is an upper middle-income country

with a gross national income per capita of $7,210 in 2005 (GNI, Atlas method). 

Its population of 3.4 million enjoys high living standards and the health indicators of its citizens are significantly better than those of most other countries in the Europe and Central Asia Region. 

Lithuania acceded to the European Union on May 1, 2004

LithuaniaPopulation, total (millions)    3.4

Population growth (annual %)   -0.6

Life expectancy at birth, female (years)     77.8

Life expectancy at birth, male (years)    66.4

Poverty headcount ratio at $2 a day (PPP) (% of population)    

7.4

GDP (current US$) (billions)     25.50

GDP growth (annual %)     7.3

GNI per capita, Atlas method (current US$)    

7050

Inflation, consumer prices (annual %)    2.7

Foreign direct investment, net inflows (% of GDP)    

3.4

Unemployment, total (% of total labor force)    

12.4

Time required to start a business (days)     26

 Internet users (per 1,000 people)     282

Lithuania

Poland

An upper middle-income country with a population of 38 million, Poland had a gross national income per capita of US$7,110 in 2005 (GNI, Atlas method).

Since 1989, the nation has undergone a remarkable political, social and economic transformation.

Achievements included uninterrupted economic growth averaging 5 percent per annum during the second half of the 1990s and accession to the European Union (EU) in May 2004

PolandPopulation, total (millions)    38.2    

Population growth (annual %)     0.0       

Life expectancy at birth, female (years)     79.2       

Life expectancy at birth, male (years)     70.0       

Poverty headcount ratio at $2 a day (PPP) (% of population)   

 2.0     

GDP (current US$) (billions)     299.15       

GDP growth (annual %)     3.2       

GNI per capita, Atlas method (current US$)   

 7110     

Inflation, consumer prices (annual %)     2.1      

Foreign direct investment, net inflows (% of GDP)    

5.0       

Unemployment, total (% of total labor force)    

19.0       

Time required to start a business (days)     31      

Internet users (per 1,000 people)     236 

Poland

Russia

Russia is a middle income country with a population of approximately 143 million people and a gross national income per capita of $4460 in 2005 (GNI, Atlas method, WDI-2006).Russia is a collection of diverse territories at different stages of development.

Mainly because of high international oil prices, export revenue has soared since 2000. Import growth has picked up over the same period as a result of rising real incomes and real rouble appreciation.

The trade surplus climbed to US$118bn in 2005. The current-account surplus has been sizeable in recent years, exceeding US$84bn in 2005. The structure of exports is heavily dominated by fuels and raw materials.

Russia Population, total (millions)     143.2

 Population growth (annual %)     -0.5

Life expectancy at birth, female (years)     72.0

Life expectancy at birth, male (years)     58.8

  Poverty headcount ratio at $2 a day (PPP) (% of population)    

13.5

GDP (current US$) (billions)    763.72

GDP growth (annual %)     6.4

  GNI per capita, Atlas method (current US$)    

4460

Inflation, consumer prices (annual %)     12.7

Foreign direct investment, net inflows (% of GDP)  

2.1

  Unemployment, total (% of total labor force)    

8.6

Time required to start a business (days)     33

Internet users (per 1,000 people)     111

Russia

Current Account Balance

-20

0

20

40

60

80

100

120

Country

in U

SD

bil

lio

ns 2003

2004

2005

2006

2007

2003 -1,111 -0,911 -1,289 -4,599 35,41

2004 -1,425 -1,77 -1,742 -10,357 58,563

2005 -1,374 -2,087 -1,929 -4,82 86,56

2006 -1,401 -2,493 -2,127 -7,944 105,993

2007 -1,475 -2,607 -2,268 -10,445 99,035

Estonia Latvia Lithuania Poland Russia

GDP per capita (PPP)

0

5000

10000

15000

20000

25000

Country

In U

SD

2003 13440,4 10177,38 11713,17 11358,98 9182,86

2004 14925,77 11396,11 12856,29 12292,92 10149,89

2005 16414,03 12621,59 14158,42 12994,2 11041,07

2006 17802,21 13784,29 15442,91 13797,2 11904,32

2007 19243,03 14933,48 16756,03 14609,21 12797,84

Estonia Latvia Lithuania Poland Russia

0

200

400

600

800

1000

1200

USD billions

country

GDP current prises

2003 9,185 11,186 18,687 216,539 431,429

2004 11,229 13,723 22,625 252,369 590,705

2005 13,108 16,648 25,726 300,533 766,18

2006 13,9 19,406 28,361 320,763 900,003

2007 15,4 21,803 31,074 340,698 1046,711

Estonia Latvia Lithuania Poland Russia

Inflation

0

50

100

150

200

250

300

2003 2004 2005 2006 2007

index, 2000=100

Estonia

Latvia

Lithuania

Poland

Russia

Economic climate of the Nordic countries

The Nordic countries (Finland, Sweden, Denmark, Norway) are considered to be among the world’s wealthiest countries.The region is sophisticated, competitive and dynamic. It has a stable economic and political climate.

There are a lot of similarities in selling factors in all of the Nordic countries. Finland and Sweden are members of the European union, Norway is not an EU-member, however it is linked to the EU through the EEA agreement.

FINLAND

Finland has a highly industrialized economy. Finland’s GDP per capita is roughly the UK’s, France’s, Germany’s, and Italy’s output.

Two fifts of Finland’s GDP is consists of Exports.

Probably the biggest problem in Finland’s economy is high unemployment rate.

FINLAND

Year 2005 2006

Unemployment rate 8.90% 7,2%

Inflation rate 0,7% 0,9%

GDP $151,200,000,000 $161,900,000,000

GDP per Capita $29,000 $31,000

Imports $45,170,000,000 $56,450,000,000

Exports $61,040,000,000 $67,880,000,000

FINLAND

DENMARK

The Danish people enjoy living standards topped by no other nation, because of high GDP per capita, welfare benefits and political stability.

Denmark has decided not to join 12 other EU members in the euro, However the Danish krone has managed to keep a stable position to the Euro.

DENMARK

Year 2005 2006

Unemployment rate 6.20% 5.70%

Inflation rate 1.40% 1.80%

GDP $174,400,000,000 $189,300,000,000

GDP per Capita $32,200 $34,800

Imports $63,450,000,000 $74,690,000,000

Exports $73,060,000,000 $84,950,000,000

Exchange rate; Danish Kroner/US Dollar

5.9969

SWEDEN

Sweden has reached a high standard of living, helped by peace and neutrality through out the whole century.

Swedish voters turned down EMU in September 2003.

SWEDEN

Year 2005 2006

Unemployment rate 5.60% 5.80%

Inflation rate 0.50% 0.70%

GDP $255,400,000,000 $268,300,000,000

GDP per Capita $28 400 $29,800

Imports $63,450,000,000 $74,690,000,000

Exports $73,060,000,000 $84,950,000,000

Exchange rate; sek/usd 7.4731

Exports and imports of goods and services  Sweden

NORWAY

Norway is highly dependent on its oil production and international oil prices.Norway decided to stay out of the EU during a referendum in November 1994, however it contributes largely to the EU budget.

NORWAY

Year 2005 2006

Unemployment rate 4.30% 4.60%

Inflation rate 1,00% 1,60%

GDP $183,000,000,000 $196,400,000,000

GDP per Capita $40,000 $42,800

Imports $45,960,000,000 $58,120,000,000

Exports $76,640,000,000 $111,200,000,000

Exchange rate; Norwegian kroner / US dollar

6.4425 (2005)

GERMANY

DEMOGRAHPHICS

Population 82,422,299 Population growth rate -0.02% Sex ratio 0.96 male M/F Life expectancy at birth 78,8 years

REAL GDP GROWTH

Real GDP growth

3,21

1,24

0,059

-0,188

1,632

-0,5

0

0,5

1

1,5

2

2,5

3

3,5

2000 2001 2002 2003 2004

GDP per capita

24000

24500

25000

25500

26000

26500

27000

27500

28000

28500

29000

GDP per capita 25576 26313 27132 27647 28605

2000 2001 2002 2003 2004

GROSS DOSMESTIC PRODUCT

FOREIGN TRADE

Exports $1,016trillion Exports -

machinery ,vechicles,chemicals,metals,and manufacturers,foodstuffs,textiles

Imports $801 billion Imports -

machinery and vechicles,chemicals,foodstuffs,textiles,metals

Current account balance $115,5billion

GERMANY EXPORTS

Exports: $1,016trillion

Exports of goods

0

100

200

300

400

500

600

700

800

900

1000

in U

SD

bil

l.

Exports of goods 550,213 571,967 615,646 748,531 911,763

2000 2001 2002 2003 2004

GERMANY IMPORTS

Imports:$801billionImports of goods

0

100

200

300

400

500

600

700

800

in USD bil

Imports of goods 495,443 486,292 490,087 601,76 718,153

2000 2001 2002 2003 2004

GDP COMPOSITION

agriculture: 0.9%

industry: 29.6%

services: 69.5%

LABOUR FORCE

Labor force: 43.32 million Labor force - by occupation:

agriculture: 2.8% industry: 33.4% services: 63.8%

Unemployment rate: 11,7%

GERMANY

Budget: revenues: $1.249 trillion expenditures: $1.362 trillion

Public debt: 67.3% of GDP

Sourceswww.statisk-bund.de

www.oecd.comwww.cia.gov/cia/pubilcations/factbook

(http://www.bof.fi/bofin/gifs/bof_323_0i.gif)http://www.etla.fi/index.php?action=news&id=92

http://www.indexmundi.com/sweden/economy_overview.htmlEconomics seventh edition; (Begg, Fischer 2003)

http://www.indexmundi.com/norway/economy_overview.htmlhttp://www.export.gov/comm_svc/press_room/marketofthemonth/nordic/nordic.html

International Monetary fundWorld bank

Nordea Bank