Economists: Baltics will reach Scandinavian salaries after 30 years

After achieving our geopolitical targets - joining the European Union, NATO, OECD and Eurozone, Baltic countries should set reaching the living standards of Nordic countries as their next target. However, according to SEB bank's economists in the Baltic countries, it will take several decades to reach this goal.

"After regaining their independence, Baltic countries have developed rapidly, and currently we have reached the level where, for instance, Sweden was in the middle of 90-ties. Still, we have to remember that Nordic countries have built their welfare brick by brick through many decades. Even though we are developing at a faster pace than the Scandinavians, it will take several decades for us to reach their living standards," said Dainis Gašpuitis, macroeconomics expert at SEB Latvia.

"The good news is that Baltic countries will continue to grow faster than the Nordics. Nevertheless, we have to remember - the higher we climb, the slower our progress will be, and we will encounter obstacles. For example, the middle income trap is a very real risk for all three Baltic countries," Mihkel Nestor, economist at SEB Estonia pointed out.

"In several areas Baltics have already surpassed Nordic countries. For example, our internet speed and mobile communications infrastructure are better than in Sweden or Finland. IT solutions allow us to bypass the main shortcoming of the Baltics - the small size of the market. We can reach a unlimited number of customers through digital channels. Still, the question is - will we be able to use this advantage in the most efficient way and turn it into economic benefits," asked Tadas Povilauskas, senior analyst at SEB Lithuania.

Economists also agreed that although all three Baltic countries should allocate considerably more resources for research and development, there are numerous areas where the economic effect is within our grasp. There are many companies in Nordics doing exactly the same thing as their competitors in Baltics. The difference is that Swedish and Finnish companies are able to ask a much higher price for their products - due to the fact that they have strong, internationally recognized and valued brands. In Baltics we have far too few of such brands.

Economists also emphasized that GDP and salaries are not the only indicators that Baltics should focus on. Welfare of Nordic countries also means an internationally competitive education and a universally available healthcare system. A competitive education system is undoubtedly one of the keys to a more prosperous society, and all three Baltic countries should motivate more young people to master engineering sciences.

"We have to keep in mind that Nordic countries started to build their prosperity many decades ago while for Baltics this stretch is less than 30 years. If instead of Scandinavians we compare ourselves with those countries who also started their path in the beginning of 90-ties, it is obvious that Baltic countries have done a tremendous job. There is no reason why we cannot reach the Scandinavian welfare in the future," concluded Dainis Gašpuitis.