The economic context of Lithuania

Economic Indicators

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 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. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

Find more information about your business sector on our service Market reports.

 

 

Find out all the exchange rates daily on our service International currency converter.

 

Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

76,9/100

World Rank:

15

Regional Rank:

8

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:

6.94/10

World Rank:

31/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Sources of General Economic Information

Ministries

Ministry of Economy
Ministry of Finances

Statistical Office

Department of Statistics

Central Bank

Central Bank of Lithuania

Stock Exchange

Nasdaq Nordic

Economic Portals

Baltic Times
Delfi