Economic Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
As a member of the EU since 2004, Lithuania has experienced significant growth coupled with the rapid modernisation of its economy, becoming a member of the OECD in 2018. The country experienced the fastest recovery in Europe from the 2009 financial crisis, partly fuelled by a well-performing banking system and a diversified industrial sector; and it was one of the best-performing countries during the COVID-19 pandemic. Nevertheless, after growing 5% in 2021, economic growth in Lithuania slowed down in 2022 to 1.8%. This was mostly due to the adverse consequences of the Russian invasion of Ukraine, falling exports to some eastern European countries and contracting private consumption. Economic activity is forecast to decelerate further in 2023 (1.1% as per the IMF’s forecast) before edging up to 2.8% in 2024 driven by stronger private consumption expenditure and increased EU funds absorption.
Macroeconomic indicators are generally positive, having recorded budget surpluses before the pandemic. Nevertheless, the budget turned negative since then: in 2022, it was in deficit by 2.1% of GDP and in 2023 Fitch Ratings expects it to deteriorate to 4.3% amid higher expenditure measures, including packages to contain the effects of higher energy prices, spending on Ukrainian refugees, and investment in Lithuania's railway infrastructure as a result of the sanctions against Belarus. The 2023 budget also includes various more permanent measures, including wage increases in the public sector, in non-taxable income, in pensions, child benefits and other social benefits. The debt-to-GDP ratio decreased to 42.2% as strong nominal GDP growth outpaced nominal growth in debt by a large margin. The ratio is expected to follow a downward trend this year (39.5%) and the next (37.9% - IMF). Spiralling energy and food prices, as well as transportation services, contributed to a spike in the inflation rate, which averaged 17.6% in 2022. Strong wage dynamics have also contributed to an acceleration of core inflation. Weaker domestic and external activity, easing supply bottlenecks, and a gradual decline in global energy prices are expected to contribute to the declining dynamics of inflation, which is forecast at 8.4% and 3.2% in 2023 and 2024, respectively, by the IMF.
The unemployment rate increased marginally to 7.3% in 2022, from 7.1% one year earlier. Shortages of skilled labour, an increase in the minimum wage by 15% and strong public-sector wage growth should support continued wage growth in 2023, with the unemployment rate also decreasing to around 7%. The IMF estimated the country’s GDP per capita (PPP) at USD 46,159 in 2022; however, according to the latest figures released by Statistics Lithuania, around 24.5% of the population is at risk of poverty.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 56.80 | 66.49 | 70.52 | 78.35 | 85.05 |
| GDP (Constant Prices, Annual % Change) | -0.0 | 6.0 | 1.9 | -0.3 | 2.7 |
| GDP per Capita (USD) | 20,323 | 23,739 | 25,036 | 28,094 | 30,776 |
| General Government Balance (in % of GDP) | -6.1 | -1.4 | -1.5 | -4.5 | -3.1 |
| General Government Gross Debt (in % of GDP) | 46.3 | 44.0 | 39.6 | 40.2 | 39.1 |
| Inflation Rate (%) | 1.1 | 4.6 | 18.9 | 10.5 | 5.8 |
| Unemployment Rate (% of the Labour Force) | 8.5 | 7.1 | 5.9 | 7.0 | 6.5 |
| Current Account (billions USD) | 4.15 | 0.93 | -3.15 | -2.38 | -1.72 |
| Current Account (in % of GDP) | 7.3 | 1.4 | -4.5 | -3.0 | -2.0 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
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