VILNIUS, Aug. 7 (Xinhua) -- Lithuania is experienced in trade war and its business has plan B at hand to cope with Russia's ban on food imports from the European Union, an economist said Thursday.
Lithuanian businesses are used to looking for alternative markets, Zygimantas Mauricas, the economist, chief economist of Nordea Bank in Lithuania, told Xinhua in an interview on Thursday.
In 2013, Russia forbade dairy products imports from Lithuania, "our producers quickly switched to other markets -- Latvia, the Netherlands, Italy, Poland, even Cuba or Uzbekistan," said Mauricas.
He said that Lithuanian companies used to switch to alternative markets quite quickly and effectively. Potential markets for Lithuania would include Middle East, Africa and Asia, especially China and Central Asia.
Lithuania's trade volume with Asia remains at a low level currently, leaving the Baltic country relying on the markets of the EU and the Commonwealth of Independent States (CIS) countries, according to Mauricas.
"The diversification of our export markets is one of the most important priorities both at state and business levels. And China is on the top list," Mauricas added.
Russian Prime Minister Dmitry Medvedev said earlier on Thursday that Russia is imposing a ban on food imports from the EU and the United States in retaliation for their sanctions against Moscow over the Ukraine crisis.
IMPACT OF RUSSIA'S IMPORT BAN
Lithuania serves as a transit country between the EU and Russia, and the most vulnerable sector under Russia's imposed import ban on EU is transport and logistics, according to Mauricas.
Almost a third of transport and logistics sector income comes from Russia market, and "unexpected and unplanned factors may affect the whole supply chain," said Mauricas.
Food industry is also influenced under the sanctions, but Mauricas predicted that the impact on food sector would be relatively weak, "since Lithuanian business is competitive enough to turn to alternative markets quite quickly."
Mauricas also pointed out that a major part of Lithuania's export to Russia is re-exported goods rather than the export of Lithuanian goods.
Concerning Lithuania's gross domestic product (GDP) under Russia's sanctions, Mauricas believed "we could probably presume a more significant effect on GDP if the economic war would continue, but as for now, it is too early to estimate a long-term effect."
SANCTIONS HARM BOTH
"Mutual sanctions could see the euro zone sliding into its third recession because some EU countries are still very fragile after the economic crisis of 2009," Mauricas pointed out.
"Not many options are available to the EU as any response from the West will be of a negative nature," he added.
Mauricas also said sanctions could be most harmful to Russia which imported 40 percent of its total food product consumption.
"The consequences are clear -- some products will not be available in Russia, which will lead to greater inflation, bearing in mind that already now it is a major issue," he continued.
Regarding Russia's sanctions, Mauricas said "we cannot view Russian sanctions positively because it shows that mutual sanctions are gaining momentum."
"This is obvious from the recent developments on the financial markets as investors have suddenly started selling shares due to fears of not only the case of Russia but also fearing the frailty of this period of free trade, open world and sustainable economic growth which may end," he stressed.
Russia on Thursday banned imports of fruit, vegetables, meat, fish, milk and dairy products from the United States, the EU, Australia, Canada and Norway in response to Western sanctions.