Economic growth and security in the Baltics

1
Economic growth and security in the Baltics

• Dr. Krišjanis Karinš
• Minister of Economics, Latvia

2
Overview

• Current growth in the Baltics
• Economic security
• Energy sources in the Baltics
• Electricity needs and supplies
• Conclusion

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Current growth in the Baltics

• All three Baltic countries very similar
• History
• Massive structural changes
• Incredibly dynamic growth
• Case of Latvia illustrates region as a whole

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GDP growth in Latvia (1995 100)
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GDP growth in the Baltics (1995 100)
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Increase of investments in Latvia (1995100)

• Factors stimulating investment
• Liberal trade and investment policy
• Stable macroeconomic environment
• Government openness to investors
• New area for making business

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FDI stock in Latvia(Accumulated stock in mln )
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Current growth in the Baltics

• We are all growing very rapidly
• Goal is to sustain high growth rates
• Are our economies secure?

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Overview

• Current growth in the Baltics
• Economic security
• Energy sources in the Baltics
• Electricity needs and supplies
• Conclusion

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Economic security

• The Baltics are firmly grounded in the EU and
  NATO
• Result of 15 years of consequent work
• Our economies are fueled not only by highly
  motivated people, but also by energy
  electricity, heat, fuel

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Economic security

• Question how secure are our energy sectors?
• Continued supply
• Predictable and reasonable price
• In order to sustain high growth rates, we need to
  ensure stable energy supplies

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Overview

• Current growth in the Baltics
• Economic security
• Energy sources in the Baltics
• Electricity needs and supplies
• Conclusion

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Primary energy sources in Estonia
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Primary energy sources in Latvia
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Primary energy sources in Lithuania
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Energy sources in the Baltics

• Estonia 70 domestic 30 imported
• Latvia 33 domestic 67 imported
• Lithuania 45 domestic 55 imported
• Almost exclusive source of imported energy
  Russia oil and gas

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Overview

• Current growth in the Baltics
• Economic security
• Energy sources in the Baltics
• Electricity needs and supplies
• Conclusion

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Electricity needs and supplies

• Currently Estonia and Lithuania are net exporters
  of electricity
• Latvia is a net importer
• This situation seems set to change, as Estonia
  and Lithuania comply with EU requirements

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Electricity generation in Estonia
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Electricity generation in Latvia
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Electricity generation in Lithuania
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Electricity needs and supplies

• Rebuilding of antiquated power stations will cost
  money
• Result of rebuilding is aimed at meeting local
  demand (at best)
• Rebuilding of local production in Latvia and
  Lithuania will increase overall dependence on
  imported energy sources (oil and gas)

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Electricity needs and supplies

• Each Baltic state has its individual strengths
  and advantages
• Estonia domestic oil shale
• Latvia abundant hydro power
• Lithuania nuclear expertise

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Overview

• Current growth in the Baltics
• Economic security
• Energy sources in the Baltics
• Electricity needs and supplies
• Conclusion

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Conclusion

• In order to talk about sustainable growth, we
  need to talk about stable energy supplies
• Handling this issue separately, we lose the
  positive effects of combining the individual
  strengths of each country

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Conclusion

• The Baltic states need to combine their strengths
  in the energy sector
• Create a stable market
• Coordinate power station development
• Ensuring a stable supply
• Ensuring a predictable price
• Stable energy supply is a prerequisite for
  sustainable economic growth