Economic Outline

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).

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