Lithuania: Economic and Political Overview

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.

Foreign Trade in Figures

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%.

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

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