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Macro-Economic Aspects of BALTIC Sea Rim Countries Roshan Hemantha Alahendra Jukka Vakio Azeez 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) GDP growth (annual %) GNI per capita, Atlas method (current US$) 13.11 9.8 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 eastwest trade and energy transit routes. Forests cover almost 40 percent of the country's territory. Latvia Population, 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) GDP growth (annual %) GNI per capita, Atlas method (current US$) 15.77 10.2 6760 Inflation, consumer prices (annual %) 6.8 Foreign direct investment, net inflows (% of GDP) 5.1 Unemployment, total (% of total labor force) Time required to start a business (days) Internet users (per 1,000 people) 10.6 18 350 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 Lithuania Population, 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) GDP growth (annual %) 25.50 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 Poland Population, total (millions) 38.2 Population growth (annual %) 0.0 Life expectancy at birth, female (years) 79.2 Life expectancy at birth, male (years) Poverty headcount ratio at $2 a day (PPP) (% of population) GDP (current US$) (billions) 70.0 2.0 299.15 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 currentaccount 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 $2 a day (PPP) (% of population) GDP (current US$) (billions) GDP growth (annual %) GNI per capita, Atlas method (current US$) 13.5 763.72 6.4 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 120 in USD billions 100 80 2003 60 2004 2005 40 2006 20 2007 0 -20 Estonia Latvia Lithuania Poland Russia 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 Country GDP per capita (PPP) 25000 In USD 20000 15000 10000 5000 0 Estonia Latvia Lithuania Poland Russia 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 Country GDP current prises 1200 1000 800 USD billions 600 400 200 0 Estonia Latvia Lithuania Poland Russia 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 country Inflation 300 250 200 Estonia Latvia index, 2000=100 150 Lithuania Poland Russia 100 50 0 2003 2004 2005 2006 2007 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 Unemployment rate 2005 8.90% 2006 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 Population growth rate 82,422,299 -0.02% Sex ratio M/F Life expectancy at birth 0.96 male 78,8 years REAL GDP GROWTH Real GDP growth 3,5 3,21 3 2,5 2 1,632 1,5 1,24 1 0,5 0,059 0 2000 -0,5 2001 2002 2003 -0,188 2004 GROSS DOSMESTIC PRODUCT GDP per capita 29000 28500 28000 27500 27000 26500 26000 25500 25000 24500 24000 GDP per capita 2000 2001 2002 2003 2004 25576 26313 27132 27647 28605 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 1000 900 800 700 in USD bill. 600 500 400 300 200 100 0 Exports of goods 2000 2001 2002 2003 2004 550,213 571,967 615,646 748,531 911,763 GERMANY IMPORTS Imports:$801billion Imports of goods 800 700 600 500 400 300 200 100 0 Imports of goods 2000 2001 495,443 486,292 2002 2003 2004 490,087 601,76 718,153 in USD bil 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 Sources www.statisk-bund.de www.oecd.com www.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.html Economics seventh edition; (Begg, Fischer 2003) http://www.indexmundi.com/norway/economy_overview.html http://www.export.gov/comm_svc/press_room/marketofthemonth/nordic/nordic.html International Monetary fund World bank Nordea Bank