Page 58 - CE Outlook Regions 2023

3.5.2 Banks
Despite the shock from the war, there have been limited capital outflows
from the three Baltic states following the war, and the corporate sector
remains robust. Baltic banks are well capitalised and businesses
maintain substantial cash reserves.

The Baltic banking system remained stable throughout 2022 despite
the heavy impact of war on the local economies.

3.5.3 Industry

Industrial production was edging down in the Baltics at the end of 2022
and will likely stagnate in the first half of 2023. However, relatively fast
growth rates are forecast in the biggest manufacturing sector –
wood-processing, especially in Latvia and Lithuania.

3.5.4 Energy & power

With the region’s dependence on imported energy – one of the leading
factors of historically high inflation – it’s vital for the Baltic states to
develop domestic energy production and support the transition to green
energy. Renewable energy and green transition are high on the agenda
in all three Baltic states.

Lithuania has postponed the final stage of household electricity market
liberalisation until 2024, a result of collapse of an independent
electricity provider that could not afford buying electricity at a
record-high market price from NordPool Exchange.

3.5.5 Construction

According to the data of Lithuania’s State Enterprise Centre of
Registers, the general activity in the country’s secondary apartment
market has dropped 15% (during the period from July to October 2022

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