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Lithuania

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Economic and political overview

Economic Overview

As a member of the EU since 2004, Lithuania has experienced significant growth coupled with the rapid modernization 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 fueled 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. After two years of stagnation, Lithuania's GDP grew by 2.6% in 2024. Economic recovery has been mainly driven by private consumption, fueled by strong wage growth and low inflation, which offset weak private investment. Despite external uncertainties, the external sector also contributed positively, particularly through robust services exports. Private consumption growth is expected to accelerate in 2025 and, to a lesser extent, in 2026, driven by continued real wage growth. Investment in intangibles, defence, and energy is projected to increase starting in 2025, supported by EU funding and monetary policy easing. While export growth will largely depend on the EU recovery, imports are anticipated to outpace exports. Overall growth is forecast at 2.6% this year and 2.4% in 2026 (IMF).

Macroeconomic indicators are generally positive, having recorded budget surpluses before the pandemic. Nevertheless, the budget turned negative since then: in 2024, the general government deficit rose significantly to 2% of GDP, up from 0.7% in 2023, due to higher social spending, interest payments, public wages, and capital transfers for national defence. In 2025, the deficit is projected to increase further to 2.4% of GDP, driven by a 0.7 percentage point rise in government expenditure, while revenue grows at a slower pace. The main factor is a 0.6 percentage point increase in social benefits, including pensions, largely due to pension indexation and a 26% rise in the minimum consumption basket. Public debt reached 38.3% of GDP in 2024, with the debt-to-GDP ratio rising to 41.0% in 2025 and 44.6% in 2026, mainly due to the growing deficit and necessary stock-flow adjustments (data EU Commission). Inflation in Lithuania is expected to rise in 2025, partly due to higher indirect taxes, before stabilizing above 2%. After hitting a low of 0.1% in October 2024, headline inflation rose to 1.9% by year-end. Core inflation remained high, driven by strong service price growth and high wages, despite lower prices for food and industrial goods. While inflation fell below the eurozone average in 2024, high past inflation and wage growth highlight the need for productivity growth to maintain competitiveness.

The continued inflow of people fleeing the war in Ukraine and entering the labour market eased labour demand pressures in 2024. However, with not all new entrants finding employment, the unemployment rate was projected to rise from 6.9% in 2023 to 7.5% in 2024. In 2025, slower arrivals of displaced persons, along with natural population decline, are expected to reduce the unemployment rate to 7.0%, and further to 6.9% in 2026 (EU Commission). The IMF estimated the country’s GDP per capita (PPP) at USD 53,623  in 2024, slightly below the EU average; however, according to the latest figures released by the EU Commission, around 6.5% of the population is living below the absolute poverty line, with 20.9% being at risk of poverty.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 77.8482.7987.9892.9097.19
GDP (Constant Prices, Annual % Change) -0.32.42.62.42.2
GDP per Capita (USD) 26,99828,71330,51432,21833,978
General Government Balance (in % of GDP) -0.5-1.3-1.3-1.3-1.4
General Government Gross Debt (in % of GDP) 38.338.137.937.637.4
Inflation Rate (%) 8.70.92.42.62.4
Unemployment Rate (% of the Labour Force) 6.97.37.16.56.1
Current Account (billions USD) 1.512.332.552.672.73
Current Account (in % of GDP) 1.92.82.92.92.8

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture contributes 2.7% to the GDP and employs 5.1% of the workforce (World Bank, latest data available). Farming plays a crucial role in land use, as approximately 45% of Lithuania's total land area is dedicated to agricultural activities, with around 150,300 agricultural holdings spread across the country (data from the EU Commission). The main agricultural products are wheat, wood, barley, potatoes, sugar beets, wine, and meat (beef, mutton, and pork). Arable land and permanent crops cover 2 million hectares, more than one-third of the country’s territory. According to the latest figures from the National Statistical Office, in 2024, the gross agricultural production at current prices stood at EUR 3.80 billion, marking a 4.1% increase from the previous year. Grain crops surged 3.3% y-o-y, while the number of slaughtered animals decreased by 2%.

The industrial sector accounts for 24.2% of GDP, employing around 25.8% of the active population. The main subsectors are electronics, chemical products, machine tools, metal processing, construction material, household appliances, food processing, light industry (including textile), clothing, and furniture. The country is also developing oil refineries and shipyards. The World Bank estimates that the manufacturing sector alone contributes to 15% of the country’s GDP. In 2024, the industrial production index stood at 103.9 (2021 as the base year), while the manufacturing index reached 106.7 (data Official Statistics Portal).

Lastly, the services sector contributes 63.1% to the GDP and employs more than two-thirds of the active population (69.1%). The information technology and communications sectors are the most important contributors to the GDP. In recent years, tourism has been one of the fastest-growing sectors of the country's economy: in 2023, the total value added of the sector reached 1.7 billion, marking a 28% year-on-year increase and 31.3% above the pre-pandemic level (Official Statistics Portal, latest data available). The Lithuanian banking sector consists of 18 banks, thirteen of which hold a banking or specialized banking license, and five banks operate as branches of foreign banks. The sector is dominated by SEB and Swedbank, both subsidiaries of Swedish parent companies, which together control 52.5% of the market. Revolut Holdings Europe UAB held a market share of 19.6%, while Luminor Bank AS Lietuvos Skyrius accounted for 13.1% (European Banking Federation, data 2023). Concerning retail trade, the turnover in constant prices increased by 4.7% y-oy, while that of food and beverage service activities dropped by 6.9%.    

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.1 25.8 69.1
Value Added (in % of GDP) 2.7 24.2 63.1
Value Added (Annual % Change) -2.7 -1.4 1.3

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.940.890.850.890.88

Source: World Bank - Latest available data.

 

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Foreign Trade

Lithuania is a very open economy, with foreign trade representing 149% of GDP (World Bank, latest data available). According to Statistics Lithuania, in 2024, Lithuania's exports were predominantly made up of mineral products (14.2%), machinery and mechanical appliances, and electrical equipment (13.6%), followed by products of the chemical and allied industries (11.2%). On the import side, the largest categories were mineral products (18.9%), machinery and mechanical appliances, and electrical equipment (17.5%), along with products of the chemical and allied industries (12.2%). When considering goods of Lithuanian origin, the top exports were mineral products (18.1%), miscellaneous manufactured articles (11.1%), prepared foodstuffs, beverages and spirits, tobacco, and manufactured tobacco substitutes (10.5%), and machinery and mechanical appliances, electrical equipment (9.1%).

In 2024, Lithuania's key export partners were Latvia (11.9%), Poland (9.9%), and Germany (8.7%). On the import side, the largest trading partners were Poland (14%), Germany (12.4%), and Latvia (8.1%). When considering only goods of Lithuanian origin, the main export destinations were Germany (9.9%), Poland (9.6%), the Netherlands (8.7%), Latvia (7.7%), and the United States (6.8% - data Statistics Lithuania).

The country's merchandise trade balance has historically been in deficit, which can largely be explained by the energy imports and, particularly, by the large amount of gas Lithuania imports from Russia. In 2024, compared to 2023, exports decreased by 7.7%, while imports fell by 7.8%. The value of exports was EUR 39.75 billion, and imports amounted to EUR 44.84 billion. Exports fell due to decreases in ground vehicles (24.9%), mineral fuels and oils (12%), and machinery and appliances (15.7%). Imports declined mainly in mineral oils (14.4%), ground vehicles (17.1%), and machinery (11.7%). Excluding mineral products, exports dropped by 7%, while imports decreased by 6.6%. Exports of Lithuanian-origin goods declined by 0.3%, but excluding mineral products, they increased by 2.6%.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 35,75933,32944,48855,09548,436
Exports of Goods (million USD) 33,15132,80540,70646,48542,639
Imports of Services (million USD) 7,7406,7279,59811,98513,336
Exports of Services (million USD) 13,28212,48516,03218,26021,164

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 148.4135.8154.8175.7149.0
Trade Balance (million USD) -2,634-455-3,418-7,684-4,918
Trade Balance (Including Service) (million USD) 2,8935,2273,002-1,4683,121
Imports of Goods and Services (Annual % Change) 6.1-4.319.212.7-5.3
Exports of Goods and Services (Annual % Change) 10.00.116.612.4-3.4
Imports of Goods and Services (in % of GDP) 71.663.475.288.972.6
Exports of Goods and Services (in % of GDP) 76.872.479.686.876.5

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 2.04.83.74.04.0
Volume of imports of goods and services (Annual % change) 1.54.94.24.44.3

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Lithuania is member of the European Union since 2004 and has close ties with nearby Baltic and Eastern European countries. It is well integrated in the international trade system and is party to a number of agreements.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Latvia 10.8%
Poland 9.3%
Germany 7.8%
Netherlands 5.9%
Estonia 5.5%
See More Countries 60.8%
Main Suppliers
(% of Imports)		 2023
Germany 13.8%
Poland 13.2%
Latvia 8.1%
United States 6.4%
Netherlands 5.4%
See More Countries 53.0%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Gitanas NAUSEDA (since 12 July 2019)
Prime Minister: Gintautas PALUCKAS (since 12 December 2024)
Next Election Dates
Presidential: 2029
Parliamentary: October 2028
Main Political Parties
Lithuania has a multi-party system in which a single party usually does not have a chance of gaining power alone. Parties often work together to form coalition governments. The major parties in the parliament include:

- Lithuanian Social Democratic Party (LSDP): centre-left, progressive, oldest party
- Homeland Union - Lithuanian Christian Democrats (TS-LKD): centre-right, nationalist
- Dawn of Nemunas (PPNA): populist, nationalist
- Union of Democrats "For Lithuania" (DSVL): centre-left on economic policy and centre-right on socio-cultural issues
- Farmers and Green Union (LPGU): centrist agrarian
- Liberal Movement of the Republic of Lithuania (LRLS): centre-right
- Electoral Action of Poles in Lithuania (EAPL–CFA): conservatism, polish minority interest
- National Alliance (NA): far-right
- Freedom and Justice (PLT): conservative liberalism.
Executive Power
The President of Lithuania is the head of state, elected by popular vote for a five-year term, renewable once consecutively. The President also serves as commander-in-chief of the armed forces and plays a key role in overseeing foreign and security policy. The Prime Minister, who is the head of government, is appointed by the President with the approval of the Seimas (Parliament), usually from the majority party or ruling coalition, and serves a four-year term. The Prime Minister holds executive powers, including the implementation of laws and managing the day-to-day affairs of the government. The Council of Ministers (Cabinet) is appointed by the President based on the Prime Minister’s nominations.
Legislative Power
Lithuania's legislature is unicameral, with the Seimas serving as the sole parliamentary chamber, consisting of 141 seats. Members are elected through a mixed electoral system: 71 members are chosen in single-member constituencies by majority vote, while 70 members are elected through proportional representation from party lists. All members serve four-year terms. A party must secure at least 5% of the national vote to gain representation in the Seimas, while multi-party alliances must reach 7%.

The Prime Minister does not have the authority to dissolve the Seimas. However, the President can dissolve Parliament under specific conditions, such as if the Seimas fails to adopt a budget within 60 days, expresses no confidence in the government, or formally requests dissolution. The President cannot dissolve the Seimas during a state of emergency, in the last six months of their term, or within six months of a previous dissolution. Additionally, the Prime Minister does not have veto power over legislation passed by the Seimas.

 

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