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

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 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 the only euro area Member State that did not see real GDP decline in the first quarter of 2020. In fact, Lithuania resisted well to the COVID-19-induced crisis, with GDP contracting by only 0.9% in 2020, followed by a rebound of 4.8% in 2021 when growth was fuelled by private demand and positive performance of the real estate and manufacturing sectors. Economic activity is forecast to decelerate over the forecast horizon, growing by 4.1% this year and 3.1% in 2023 (IMF), due to persistent uncertainty amid the ongoing pandemic.

Macroeconomic indicators are generally positive, having recorded budget surpluses in recent years. Nevertheless, sizeable stimulus packages implemented to contain the effects of the pandemic drove the budget in negative territory, at -4.8% in 2021. Despite the economic recovery, the IMF expects the budget to be negative in 2022 and 2023, by 2.6% and 1.2%, respectively. Conversely, the debt-to-GDP ratio increased to 47.4% in 2021 (from a pre-pandemic level of 35.9%), although it should follow a downward trend this year (45.5%) and the next (43.7% - IMF). Consumer price inflation surged in Lithuania towards the end of 2021, mostly driven by a spike in energy prices, the overall rate stood at 3%. Services prices are expected to increase at the fastest pace in more than a decade as a consequence of rising wages and rebounding domestic demand: the EU commission forecasts the rate to increase to 6.7% in 2022 (whereas the IMF expects it to be just above 2.8%), before moderating to 2.7% in 2023.

The Lithuanian government introduced a number of measures to protect employment and provide additional support for job seekers during the COVID-19 crisis; resulting in an unemployment rate of 6.5% in 2021 (from 8.5% one year earlier). The rebound in economic activity should gradually bring the unemployment rate down to 6% by 2023. Net migration was positive for the first time in 2019, and again in 2020, which helped to ease labour shortages (the country has one of the lowest population growth rates in the world), but it turned negative again in 2021. According to the figures released by Statistics Lithuania, around 585,000 people were at risk of poverty, with 5.1% of the population living in absolute poverty in 2020 (latest data available).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 56.5065.5568.0372.6378.00
GDP (Constant Prices, Annual % Change) -0.15.01.81.12.8
GDP per Capita (USD) 2023242527
General Government Balance (in % of GDP) -6.6-1.2-2.1-1.3-1.2
General Government Gross Debt (in % of GDP) 46.644.742.239.537.9
Inflation Rate (%) 1.14.617.68.43.2
Unemployment Rate (% of the Labour Force) 8.57.17.37.06.5
Current Account (billions USD) 4.150.93-1.09-1.49-1.24
Current Account (in % of GDP) 7.31.4-1.6-2.1-1.6

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

Note: (e) Estimated Data

Main Sectors of Industry

Agriculture contributes 3.3% to the GDP and employs 6.4% 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 figures from the national statistical office, in 2021 the total grain crops production stood at 5,621.3 thousand tonnes, down by 18.9% compared to the previous year; whereas the gross agricultural production reached EUR 3.2 billion (+11.7% y-o-y).

The industrial sector accounts for 24.9% of GDP, employing around 25.7% 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 15.7% of the country’s GDP.

Lastly, the services sector contributes 61.5% to the GDP and employs more than two-thirds of the active population (67.9%). 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; however, data from the national tourism development agency shows that the total number of nights spent in tourism accommodations in 2021 was still 39.4% below the pre-pandemic level (although it was up by 15.1% compared to 2020). Lithuanian banking sector consists of 17 banks, eleven 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) 6.4 25.7 67.9
Value Added (in % of GDP) 3.3 24.9 61.5
Value Added (Annual % Change) 5.4 0.6 -1.8

Source: World Bank - Latest available data.

 

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

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

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

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 138.5% 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%).

The European Union is Lithuania’s major trading partner. Its exports are mostly destined to Russia (13.4%), Latvia (9.2%), Germany (8.1%) and Poland (6.4%). The main origins of Lithuania’s imports were Poland (13%), Germany (12.9%), Russia (8.8%), Latvia (7.8%) and the Netherlands (5.5%).

The country's merchandise trade balance has historically been in deficit, which can largely be explained by the country's energy imports and, particularly, by the large amount of gas it imports from Russia. In 2021, Lithuania exported goods worth EUR 34.5 billion, with imports amounting to EUR 37.5 billion. Compared to a year before, exports in 2021 increased by 20.3% and imports by 28.5%. However, the balance of services is generally positive: in the first three quarters of 2021 exports stood at EUR 3.2 billion (+17.8%) as imports grew at a faster pace, to EUR 2 billion (+39.1% y-o-y – Statistics Lithuania).

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 27,19632,25836,50235,75933,140
Exports of Goods (million USD) 24,94629,90133,33733,15132,767
Imports of Services (million USD) 5,0695,8717,0507,6926,504
Exports of Services (million USD) 7,4459,40811,33013,19112,253
Imports of Goods and Services (Annual % Change) 4.011.16.06.3-5.3
Exports of Goods and Services (Annual % Change) 4.913.56.89.5-0.0
Imports of Goods and Services (in % of GDP) 66.971.373.472.264.4
Exports of Goods and Services (in % of GDP) 67.673.675.277.474.1
Trade Balance (million USD) -2,101-2,307-3,289-2,634-304
Trade Balance (Including Service) (million USD) 3041,1339772,8385,419
Foreign Trade (in % of GDP) 134.5144.9148.6149.7138.5

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

 

Main Partner Countries

Main Customers
(% of Exports)
2021
Russia 10.8%
Latvia 9.3%
Germany 8.2%
Poland 7.9%
United States 6.3%
See More Countries 57.5%
Main Suppliers
(% of Imports)
2021
Germany 12.8%
Poland 12.1%
Russia 11.9%
Latvia 7.7%
Netherlands 5.3%
See More Countries 50.3%

Source: Comtrade, Latest Available Data

 
 

Main Products

40.8 bn USD of products exported in 2021
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 8.2%
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) 4.8%
Diagnostic or laboratory reagents on a backing,...Diagnostic or laboratory reagents on a backing, prepared diagnostic or laboratory reagents whether or not on a backing, and certified reference materials (excl. compound diagnostic reagents designed to be administered to the patient, blood-grouping reagents, animal blood prepared for therapeutic, prophylactic or diagnostic uses and vaccines, toxins, cultures of micro-organisms and similar products) 2.8%
Wheat and meslinWheat and meslin 2.0%
Cigars, cheroots, cigarillos and cigarettes of...Cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes 2.0%
See More Products 80.1%
44.6 bn USD of products imported in 2021
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 9.4%
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) 3.4%
Electrical energyElectrical energy 3.0%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.6%
Tractors (other than tractors of heading 8709)Tractors (other than tractors of heading 8709) 2.1%
See More Products 79.4%

Source: Comtrade, Latest Available Data

 
 

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

 
 

Main Services

2.0 bn USD of services exported in 2020
49.17%
29.76%
10.93%
4.86%
2.48%
2.28%
0.43%
0.09%
1.4 bn USD of services imported in 2020
38.57%
27.79%
7.17%
5.70%
5.60%
5.53%
3.54%
3.19%
2.91%

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: 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
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 is the leader of the majority party or coalition) to serve a term of four years. The Prime Minister enjoys the 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

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Lithuania, please visit the official portal of the Lithuanian government KoronaStop.lt.
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Lithuania and the current sanitary measures in vigour, please consult the portal KoronaStop.lt including the up-to-date information on the containment measures put in place. Refer to the website of the Ministry of Health for public health recommendations, info on the protective measures, and news and updates on the preventive actions (in Lithuanian).

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

Following the measures taken by the European Commission, an export license is required to export personal protective equipment outside of the European Union.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Lithuania on the
International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

To know about the economic measures taken to address the impact of the COVID-19 pandemic on the national economy, please visit the official portal of the Lithuanian government. Additional information can be found on the website of the Ministry of the Economy and Innovation.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak 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) taken by the Lithuanian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Lithuania in the
IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme and taxation measures established by the Lithuanian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the dedicated page on the website of the Lithuanian Ministry of the Economy and Innovation. Further info concerning subsidies to employers and employees can be accessed on the official portal of the Lithuanian government.
The national portal Enterprise Lithuania provides relevant updates and insights for businesses.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
At the moment the official government sources do not provide any information on the specific programs for Lithuanian exporting companies put in place by the national government following the COVID-19 epidemic outbreak. For updated information please consult the website of the national Ministry of Economy and Innovation.
The European Commission adopted a
Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the member States where needed.
 

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Latest Update: November 2022