Russia's sanctions will not destroy Lithuanian economy

An embargo introduced by Russia on most food imports from the European Union, the United States and some other Western countries will have minor direct negative effect on Lithuania's economy, a senior bank economist said on Tuesday.
Nerijus Maciulis, chief economist of Swedbank in Lithuania, believes that Russia's sanctions will not bring Lithuania's economy on its knees.
"We should be more worried about economic weapons which Russia might show in the future," he said in the commentary published on Swedbank's website.
According to the estimates of some international organizations, Lithuania is one of the countries to be most affected by Russian food imports ban. The Baltic country's raw meat and dairy sectors are expected to suffer the biggest losses.
Swedbank calculations show that 0.4 percent of Lithuania's gross domestic product (GDP) this year might be cut off due to the direct impact of sanctions.
"Growth might be also slowed down by slumping confidence which would hurt investments and consumption," Maciulis said.
"But there is no ground for discussions about recession (in Lithuania), at least while the list of tit-for-tat sanctions is not expanded," he added.
Lithuania's Finance Ministry expects 3.4 percent GDP growth in the country this year, one of the fastest in the EU. European Commission's forecast stands at 3.3 percent.
According to Maciulis, exports of many Lithuanian products are highly diversified, and moreover, Lithuanian companies had experience to export their products to Russia through other members of Commonwealth of Independent States.
Lithuanian transport sector might be affected more seriously than products, he added.
Lithuania's exports of processed and raw food to Russia amounted to 4.74 billion litas (about 1.86 billion U.S. dollars) in 2013, which makes 5.6 percent of all exports to Russia. Nevertheless, 77 percent of Lithuanian food exports to Russia are re-exported goods, mostly fruits, vegetables, nuts and beverages.
The financial loss of Lithuanian farmers and food products due to Russian sanctions may reach 0.5 billion litas (about 0.2 billion U.S. dollars), Lithuanian lawmakers said in the meeting of the Committee of Rural Affairs on Tuesday, according to local business news website vz.lt. (1 U.S. dollar = 2.5 Litas)