Rail Baltica lifts construction volumes
- The construction of the new railway will have a substantial impact on the Baltic economies,
- boosting demand for construction materials and services,
- even when many goods and services are imported.
The new fast railway line from Estonia’s capital to the Lithuanian-Polish border is a major multiyear infrastructure project in the Baltics, amounting to EUR 5.8 billion in total, or 5% of the Baltic annual GDP. Currently expected construction volumes of the railway equal to more than 1 year of civil engineering works in Estonia, more than 2 years of works in Latvia, and 1.5 years of works in Lithuania. The detailed design of the railway is currently ongoing in all three countries, to be completed in 2022. In 2020, RB’s expected procurement value is EUR 0.8 billion, or 0.8% of the expected Baltic GDP.
According to Swedbank’s calculations based on the public information known, the construction of the railway could lift GDP directly between 0.2 and 0.6 percentage points a year per country. In addition to the direct economic impact in terms of public investment and jobs, the project also helps to achieve the region’s green goals and bring in new technology and know-how. Much shorter travel times enhance competition and facilitate the flow of goods and people, and, therefore, improve the competitiveness and productivity in the Baltic economies, and enliven the labour market, tourism, and the education market.
The main construction works of Rail Baltica are currently planned for 2022-2026, when the worst of the current crisis should already be behind us. As the main construction phase of the railway collides with the implementation of other infrastructure projects financed from the next EU budget of 2021-2027, and, possibly, other locally financed projects, the government should plan smartly so as not to overwhelm the construction market.
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