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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 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 70.3979.4386.0091.8897.25
GDP (Constant Prices, Annual % Change) 1.9-0.22.72.62.5
GDP per Capita (USD) 24,98928,48231,11933,54835,827
General Government Balance (in % of GDP) -1.3-1.7-1.3-1.1-1.1
General Government Gross Debt (in % of GDP) 38.136.134.433.031.8
Inflation Rate (%) n/a9.33.93.02.8
Unemployment Rate (% of the Labour Force) 5.96.56.36.16.0
Current Account (billions USD) -3.580.030.811.111.57
Current Account (in % of GDP) -5.10.00.91.21.6

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 3.3% to the GDP and employs 6% of the workforce (World Bank, latest data available). Lithuania's 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 preliminary figures from the national statistical office, in 2022 the gross agricultural production reached EUR 5 billion, up from EUR 3 billion one year earlier (such a sharp increase was mostly due to the increase in prices).

The industrial sector accounts for 25.3% of GDP, employing around 26% of the active population. The main industrial sectors 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 16% of the country’s GDP. In 2022, industrial production in Lithuania totalled EUR 38.4 billion at current prices and, compared to the same period in 2021, increased by 9.4% at constant prices.

Lastly, the services sector contributes 60.7% to the GDP and employs more than two-thirds of the active population (68%). 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. After contracting abruptly following the COVID-19 pandemic, the sector showed signs of recovery in the first half of 2022, when 456,000 foreign tourists visited the country: although still half of the pre-pandemic level, it was four times more than in the same period one year earlier. Moreover, domestic tourism surpassed the pre-pandemic year 2019. The Lithuanian banking sector consists of 18 banks, twelve of which hold a banking or specialized banking license, and six banks operate as branches of foreign banks (European Banking Federation).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.3 26.3 68.4
Value Added (in % of GDP) 4.0 27.2 59.6
Value Added (Annual % Change) 0.1 4.8 0.6

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 156% of GDP (World Bank, latest data available). According to Statistics Lithuania, in 2021 the country’s main exports were in the chemical and related industries (14.9%), machinery and electrical equipment (13.5%), and mineral products (10%). Lithuania mostly imported machinery and mechanical equipment (17.8%), mineral products (17.3%), and chemical and related products (12.2%).

Considered as a whole, the European Union is Lithuania’s major trading partner. In terms of single countries, in 2021 exports were mostly destined to Russia (10.8%), Latvia (9.3%), Germany (8.2%) and Poland (8%). The main origins of Lithuania’s imports were Germany (12.8%), Poland (12.1%), Russia (11.9%), Latvia (8%) and the Netherlands (5% - 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 2021, Lithuania exported goods worth EUR 40.8 billion, with imports amounting to EUR 44.5 billion. Compared to a year before, exports in 2021 increased by 24.6% and imports by 34.5%. However, the balance of services is generally positive: in 2021 exports stood at EUR 15.2 billion (+24.1%) as imports grew at a faster pace, to EUR 9 billion (+39.3% y-o-y – WTO). According to the national Department of Statistics, exports of goods of Lithuanian origin reached EUR 12.7 billion between January and June 2022 and increased by 31.1% compared to the corresponding period of 2021. Germany, Poland, and the U.S. were the leading export destinations.

 
Foreign Trade Values 20182019202020212022
Imports of Goods (million USD) 36,50235,75933,32944,48854,938
Exports of Goods (million USD) 33,33733,15132,80540,70646,340
Imports of Services (million USD) 7,0927,7406,7239,62411,982
Exports of Services (million USD) 11,43013,28212,47416,05118,319

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

Foreign Trade Indicators 20182019202020212022
Foreign Trade (in % of GDP) 148.6149.3137.0156.5177.1
Trade Balance (million USD) -3,367-2,634-451-3,414-7,688
Trade Balance (Including Service) (million USD) 9592,9045,3073,020-1,384
Imports of Goods and Services (Annual % Change) 6.06.0-4.519.912.3
Exports of Goods and Services (Annual % Change) 6.810.10.417.011.9
Imports of Goods and Services (in % of GDP) 73.472.063.976.089.5
Exports of Goods and Services (in % of GDP) 75.277.373.280.587.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) -1.75.14.84.94.9
Volume of imports of goods and services (Annual % change) -1.85.35.05.15.1

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)
2022
Latvia 12.8%
Poland 9.1%
Germany 7.9%
Estonia 5.7%
Netherlands 5.4%
See More Countries 59.0%
Main Suppliers
(% of Imports)
2022
Poland 11.7%
Germany 11.6%
Latvia 7.9%
United States 7.5%
Sweden 5.2%
See More Countries 56.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Gitanas NAUSEDA (since 12 July 2019)
Prime Minister: Ingrida SIMONYTE (since 24 November 2020)
Next Election Dates
Presidential: May 2024
Parliamentary: October 2024
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:

- Farmers and Green Union (LPGU): centrist agrarian
- Homeland Union - Lithuanian Christian Democrats (TS-LKD): centre-right, nationalist
- Lithuanian Social Democratic Party (LSDP): centre-left, progressive, oldest party
- Liberal Movement of the Republic of Lithuania (LRLS): centre-right
- Freedom Party (TT): centre, liberalism
- Labour Party (DP): centre, promotes social liberalism
- Lithuanian Green Party (LŽP): green politics
- Lithuanian Centre Party (LCP): centre, nationalist
- Electoral Action of Polls in Lithuania: conservatist, polish minority interest
- Lithuanian List (LL): centre
Executive Power
The President is the chief of state and is elected by popular vote for a five-year term renewable once. He/she is also the commander in chief overseeing foreign and security policy. The Prime Minister is the head of the government and is appointed by the President on approval of the Parliament (generally the leader of the majority party or coalition) to serve a term of four years. The Prime Minister enjoys executive powers which include implementation of the law in the country and running the day-to-day affairs. The Council of Ministers (cabinet) is appointed by the President on the nomination of the Prime Minister.
Legislative Power
The legislature is unicameral in Lithuania. The Parliament (called Seimas) has a single chamber and consists of 141 seats. Members of the Parliament are elected using a mixed system combining proportional and single constituencies; this means that 71 members are directly elected by popular vote and 70 are elected by proportional representation; all members serve four-year terms. A party must receive at least 5% of the national vote to be represented in the Seimas. The Prime Minister cannot dissolve the Parliament (but the President can do so on the recommendation of the Parliament) nor can veto its enactment.
 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) in Lithuania, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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