As forest industry products satisfy different needs, their consumption is also dependent on different macroeconomic variables. The change of GDP certainly is an underlying factor for all the products concerned but not in the same manner. Paper consumption follows most closely changes in the GDP. For sawnwood and panels the construction activity is a relevant indicator of total demand.
The construction sector shows much more cyclical variation than the GDP. Thus annual consumption figures for solid wood products also fluctuate more than is the case with paper.
Our forecasts of consumption of forest products for 2000 – 2010 are based on following assumptions:
After a deep slump slow economic growth starts in 1995 – 96 (in Poland already in 1992, in Czech Republic 1994).
In the late 1990s, the annual growth rate remains near 2%, which means that GNP in 2000 is below the 1990 level (with the exception of Poland).
In 2000 – 2010 the annual growth is estimated at 2%, which means that the level of 1990 will be exceeded in Slovenia, Hungary and the Czech Republic.
In 2010 – 2020 the growth will accelerate possibly reaching 3% annually.
This will not be enough for Latvia and Lithuania to reach the level of 1990.
These estimates are rather cautious, it is also possible that at least in some countries, like the Visegrad group, higher growth rates will be attained. This would affect the consumption figures for 2010 and 2020 but not yet the figures for 2000.
Most future demand estimates prepared by country specialists seem rather realistic although in some the consequences of the deep slump of the 1990s is underestimated. The following estimates seem too optimistic:
As for 2000 – 2020 the country estimates seem more realistic showing moderate growth in most items.
However, the conservative Czech estimate (near zero growth) contrasted with much more optimistic Polish, Hungarian and Lithuanian forecasts (1 – 4% annual growth). It seems to us that the Czech figures should be slightly corrected upwards, some of the others (like Latvian fiberboard) downwards.
The level of domestic wood utilization will decisively depend on the future of wood processing industries in the area. In the early 1990s these industries have considerably declined due mainly to domestic demand slump. In the future the fate of these industries will increasingly be determined by foreign competition. In the mechanical wood working industries, where the economics of scale are not so decisive, competitiveness can be achieved by means of modern management and marketing methods without major investments.
The pulp industry is more threatened as there the optimum mill sizes are so large that most of the presently operating pulp mills in Eastern Europe will turn out uncompetitive.
There are several large rather modern pulp mills in the area (mostly integrated with paper), one or two in Poland, two in the Czech Republic, one in Slovakia, one or two in Romania, one in Slovenia, which have good chances but the present pulp industries of Hungary, Bulgaria and the Baltic states have hardly any future.
Raw material resources would allow building modern pulp capacity in these countries, at least mechanical pulp in which the size requirement is smaller but also chemical pulp mills in Latvia and/or Estonia. The realization of these projects may be postponed to such distant future, that a long lasting domestic pulp gap will arise, which has to be covered by imports.
The developments in transition countries will in medium and long term affect trade flows in forest products in Europe. Prior 1991 the Soviet Union was a major supplier especially to Bulgaria (wood, pulp, newsprint), Hungary (wood, sawnwood, pulp, newsprint). East Germany (wood, sawnwood, pulp) but also to Poland (pulp, paper).
Russia was a major supplier of wood and pulp to the Baltic area.
This trade has dried up creating a certain potential for western exporters of sawnwood, pulp and paper. The deep demand slump in the region has prevented this potential from materializing but with improving economic prospects the markets will absorb more West European forest products as Russia will most probably be absent from those markets for a long time still.
The developments in the area will have important implications for roundwood trade. The allowable cut is increasing in the area while the prospects of the domestic forest industries are unclear, especially in the capital intensive pulp and paper industry. Many countries of the area will be able to increase pulpwood exports and, if the domestic sawmill and plywood industries will decline or be unable to pay competitive wood prices also log exports from the area will grow.
If the competitiveness of domestic industries remains low there is the risk of semi-colonial trade pattern in Europe. Countries with good access to West and North European wood processing industries (Baltic states, Poland, Czech republic, Slovakia, Hungary, possibly Slovenia) may become increasingly roundwood suppliers while they have to cover domestic requirements of processed products by imports.
