Economic and Political Overview

flag Lithuania Lithuania: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

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 growing 1.9% in 2022, real GDP is estimated to have contracted by 0.3% in 2023 according to the EU Commission. Despite notable capital investments and a rapid slowdown in inflation, economic recovery faced delays due to subdued private consumption, weak exports, and tightening financing conditions. Specifically, exports of goods, especially in the chemical, plastic, wood, and furniture sectors, continued to suffer from sluggish global demand, although exports in services showed signs of improvement. Economic growth is projected to rebound to 2.1% in 2024 and further accelerate to 3% in 2025 (EU Commission), driven by the absorption of EU funds. Recently, the European Commission and the Council endorsed Lithuania's revised Recovery and Resilience Facility (RRF) plan, featuring a new EUR 1.55 billion loan component and extra funds for renewable energy investments. The revised plan now totals EUR 3.85 billion, equivalent to 5.2% of GDP, nearly double the size of the initial RRF plan.

Macroeconomic indicators are generally positive, having recorded budget surpluses before the pandemic. Nevertheless, the budget turned negative since then: in 2023, it was in deficit by 1.7% of GDP (IMF) and Fitch predicts a renewed widening of the general government deficit to 2.5% of GDP in 2024 stemming from the fiscal impact of permanent measures aimed at safeguarding real incomes. The 2024 draft budget anticipates increased public sector wages, social benefits, and a raised threshold for non-taxable income. The general government debt declined to 36.1% of GDP by the end of 2023 (from 38.1% one year earlier, IMF). However, a renewed fiscal deterioration is projected to cause debt levels to increase to 38.5% of GDP by the end of 2024 and further to 41.3% by the end of 2025 according to Fitch Ratings (the IMF has a more positive outlook, with the debt contracting to 33% by 2025). Following a peak of 18.9% in 2022, HICP inflation eased to 9.3% in 2023. This moderation was driven by negative growth in energy prices during the second half of 2023, alongside a continued deceleration in the prices of food and manufacturing products. Inflation is projected to remain slightly above the 2% target, at 3.9% this year and 3% in 2025 (IMF).

The labor market demonstrated resilience during 2023, witnessing a downward trend in unemployment and rising employment figures, attributed to a growing number of self-employed individuals and individuals fleeing conflict in Ukraine. Wage growth remained robust, propelled by increases in minimum wages, public sector wages, and the persistently tight labor market conditions. Wage growth is expected to remain significant in 2024 due to the tight labor market and expected minimum wage increases.  (EU Commission). The World Bank estimated the country’s GDP per capita (PPP) at USD 48,397 in 2022 (10.7% lower than the EU average); 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) 71.0377.9381.1784.7388.53
GDP (Constant Prices, Annual % Change) 2.4-0.32.22.52.3
GDP per Capita (USD) 25,15227,02628,40729,92031,545
General Government Balance (in % of GDP) -1.3-0.4-2.2-1.4-1.0
General Government Gross Debt (in % of GDP) 37.835.636.235.735.0
Inflation Rate (%) 18.98.71.52.32.2
Unemployment Rate (% of the Labour Force) 5.96.66.36.16.0
Current Account (billions USD) -3.891.991.021.091.18
Current Account (in % of GDP) -5.52.61.31.31.3

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture contributes 4% to the GDP and employs 5% 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 the latest figures from the national statistical office, in 2022, agricultural production reached EUR 4.6 billion, marking a 4.8% increase from 2021. Crop production surged by 6.4%, driven by a notable increase in leguminous plants (39.1%) and cereals (5.3%). Animal production also rose by 1.7% compared to the previous year.

The industrial sector accounts for 25.7% of GDP, employing around 26% of the active population. The 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 16% of the country’s GDP. In 2022, industrial production sales amounted to EUR 38.4 billion at current prices. Compared to 2021, industrial production at constant prices rose by 9.5%, with mining and quarrying, as well as manufacturing, increasing by 7.9%. Sales to non-Lithuanian markets constituted 62.5% of the total production sold (data Official Statistics Portal).

Lastly, the services sector contributes 61.2% to the GDP and employs more than two-thirds of the active population (69%). 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. 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). Data from the national statistical office show that, in 2022, turnover (excluding VAT) for transportation and storage enterprises amounted to EUR 18.4 billion at current prices, marking a 23.3% increase from 2021. The most significant growth occurred in air transport (93.7%) and land transport and transport via pipelines (24.5%). Accommodation enterprises saw a substantial surge in turnover, reaching EUR 322.9 million in 2022, representing a 68% increase compared to the previous year. Service enterprises experienced a turnover of EUR 18.9 billion in 2022, reflecting an 18.3% increase compared to 2021.

 
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.

 

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Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 MUR 0.030.030.020.030.02

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

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:

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

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Lithuania is a very open economy, with foreign trade representing 176% of GDP (World Bank, latest data available). According to Statistics Lithuania, in 2022, the majority of exports comprised mineral products (16.9%), chemical and allied industries (12.3%), and machinery and mechanical appliances, electrical equipment (11.5%). On the other hand, imports were predominantly mineral products (28.5%), machinery and mechanical appliances, electrical equipment (14.8%), and products of the chemical and allied industries (11.3%).

In 2022, imports came chiefly from Poland (11.7%), Germany (11.6%), and Latvia (7.9%), while the main export partners were Germany (9.7%), Poland (9%), Latvia (8.7%), the United States (7.8%), and the Netherlands (7.5%). The majority of goods were exported to EU member states, accounting for 62.2% of total exports from Lithuania. Similarly, the largest proportion of imports also originated from EU member states, constituting 63.3% of total imports to Lithuania (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 USD 46.3 billion, with imports amounting to USD 54.9 billion. Compared to the previous year before, exports increased by 13.8% and imports by 22.2% (data WTO). However, the balance of services is generally positive: in 2022, exports stood at EUR 18.3 billion (+14.1%) as imports grew at a faster pace, to EUR 12 billion (+24.5% y-o-y – WTO). The country’s overall trade balance in goods and services was estimated to be negative by 2% of GDP in 2022 (World Bank). Between January and October this year, the value of Lithuania's exports decreased by 9.6% to EUR 33.16 billion, whereas imports dropped by 13.8% to EUR 37.49 billion, as reported by Statistics Lithuania.

 
Foreign Trade Indicators 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
Imports of Goods and Services (Annual % Change) 6.0-4.519.912.3n/a
Exports of Goods and Services (Annual % Change) 10.10.417.011.9n/a
Imports of Goods and Services (in % of GDP) 72.063.976.089.5n/a
Exports of Goods and Services (in % of GDP) 77.373.280.587.6n/a
Trade Balance (million USD) -2,634-451-3,414-7,688n/a
Trade Balance (Including Service) (million USD) 2,9045,3073,020-1,384n/a
Foreign Trade (in % of GDP) 149.3137.0156.5177.1n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

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

 
 

Main Products

46.5 bn USD of products exported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 11.6%
Furniture and parts thereof, n.e.s. (excl. seats...Furniture and parts thereof, n.e.s. (excl. seats and medical, surgical, dental or veterinary furniture) 4.7%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 3.1%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 2.4%
Wheat and meslinWheat and meslin 2.2%
See More Products 76.0%
55.1 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 11.1%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 9.5%
Electrical energyElectrical energy 4.6%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.5%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 2.1%
See More Products 69.2%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import-Export Flows.

 
 

Main Services

Source: United Nations Statistics Division, Latest Available Data

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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
Search Engines
Google
Lithuania on line
Economic Portals
Baltic Times
Delfi

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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: 12 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:

- Homeland Union - Lithuanian Christian Democrats (TS-LKD): centre-right, nationalist
- Farmers and Green Union (LPGU): centrist agrarian
- Lithuanian Social Democratic Party (LSDP): centre-left, progressive, oldest party
- Union of Democrats "For Lithuania" (DSVL): centre-left on economic policy and centre-right on socio-cultural issues
- 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 Regions Party (LRP): left-wing
- Lithuanian Centre Party (LCP): centre, nationalist
- Electoral Action of Polls in Lithuania: conservatism, polish minority interest
- Lithuanian List (LL): centre.
Type of State
Republic based on parliamentary democracy.
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.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
28/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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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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Latest Update: May 2024