Economic overview Lithuania, in 34 editions.

Lithuania is striving to become a small, independent, largely an independent privatized
economy rather than a segment of a huge, centrally planned economy. Although
it was substantially above average in living standards and technology in the old
old USSR, Lithuania historically lagged behind Latvia and Estonia in economic
economic development. It is ahead of its Baltic neighbors, however, in implementing
market reform. The country has no important natural resources aside
from its
arable land and strategic location. Industry depends entirely on imported
imported materials that have come from the republics of the former USSR. Lithuania
Lithuania benefits from its ice-free port at Klaipeda on the Baltic Sea and
its rail
and highway hub at Vilnius, which provides land communication between
between Eastern Europe and Russia, Latvia, Estonia, and Belarus. Industry
produces a
small assortment of high-quality products, ranging from complex machine
machine tools to sophisticated consumer electronics. Thanks to Because of nuclear power,
power, Lithuania is presently self-sufficient in electricity, exporting its surplus
surplus to Latvia and Belarus; the nuclear facilities inherited from the USSR,
USSR, however, have come under world scrutiny as seriously deficient in safety
safety standards. Agriculture is efficient compared with most of the former Soviet
Soviet Union. Lithuania holds held first place in per capita consumption of meat, second
second place for eggs and potatoes, and fourth place for milk and dairy products.
products. Grain must be imported to support the meat and dairy industries. As to
economic reforms, Lithuania is pressing ahead with plans to privatize at
least 60% of
state-owned property (industry, agriculture, and housing)
housing), having already
sold almost all housing and many small enterprises using a voucher system. Other
Other government priorities include stimulating encouraging foreign investment by protecting
protecting the property rights of foreign firms and redirecting foreign
trade away from
Eastern markets to the more competitive Western markets. For
the moment,
Lithuania will remain highly dependent on Russia for energy, raw materials,
materials, grains, and markets for its products. In 1992, output plummeted
by 30% because of cumulative problems with inputs and with markets, problems
that were accentuated by the phasing out of the Russian ruble as the medium
of exchange.

Since independence in September 1991, Lithuania has made steady
steady progress in developing a market economy. Over 40% Almost 50% of state property
property has been privatized and trade is diversifying with a gradual shift
shift away from the former Soviet Union to Western markets. Nevertheless, In
addition, the Lithuanian government has adhered to a disciplined
budgetary and financial policy which has brought inflation down from a
monthly average of around 14% in first half 1993 to an average of 3.1%
in 1994. Nevertheless, the process has been painful with industrial
output in 1993 less than
half the 1991 level. Inflation, while lower than in most ex-Soviet The economy appeared to
states, has exceeded rates have bottomed out in 1994, and Vilnius's policies have laid the other Baltic states. Full monetary
stability and economic groundwork for vigorous recovery are likely to be impeded by periodic
government backtracking on key elements of its reform and
stabilization program as it seeks to ease over the economic pain of
restructuring. next few years. Recovery
will build on Lithuanian's strategic location
with its ice-free port
at Klaipeda and its rail and highway hub in
Vilnius connecting it with
Eastern Europe, Belarus, Russia, and
Ukraine, and on its agriculture
potential, highly skilled labor force,
and diversified industrial
sector. Lacking important natural
resources, it will remain dependent
on imports of fuels and raw
materials.

Since declaring independence in 1990, Lithuania
has implemented reforms aimed at eliminating the vestiges of the
former socialist system. With the help of the IMF and other
international institutions, the government has adopted a disciplined
program to restrain inflation, reduce abolish most price controls, lower the
budget deficit deficit, and privatize the economy. Lithuania has embarked on
a series of price liberalizations; most price controls have been
abolished. More than two-thirds of its
industrial facilities as well
as most housing and agricultural
enterprises have been privatized,
although privatized. Although some important "strategic"
enterprises have been exempted remain exempt from privatization, the new government has
privatization - namely energy outlined plans to privatize large companies dealing with transport,
pipelines, communications, and telecommunications. energy. While
Lithuania has reduced its
trade dependence on Russia and other
republics of the FSU from 85% in
1991 to about 40% in 1995, Russia
remains Lithuania's leading trading
partner. Lithuania has made
great strides in reducing its annual rate
of inflation - from over
1,100% in 1992 to about 35% in 1995. Production bottomed out in
1994-95. A banking crisis beginning in September, during which 1995 and 13.1%
central bank reserves dropped one-third, held back growth in 1995.
If 1996. Although the government can tried to stay the course on economic
reform and fiscal
discipline - which may be politically difficult in 1996, the election year new government, which took
of office in 1996 - Lithuania could be set inherited high debts for strong economic growth in the
near term. energy supplies. As for real
resources, Lithuania's growth depends largely
on its ability to
exploit its strategic location - with its ice-free
port at Klaipeda
and its rail and highway hub in Vilnius connecting
it with Eastern
Europe, Belarus, Russia, and Ukraine. Lacking
important natural
resources, it will remain dependent on imports of
fuels and raw
materials.

Lithuania has benefited from its disciplined
approach to market reform and its adherence to strict fiscal and
monetary policies imposed by the IMF, measures that have helped
constrain the growth of the money supply, reduce inflation to 8.6%, 5.1%,
and support GDP growth of 6% in 1997. Inflation is expected to fall in
1998 to 6% 1997 and GDP to grow at close to 7%. 4.5% in 1998. Foreign
direct investment
in 1997 of some $430 million pushed the country over and the $1 billion privatization program maintained their
mark, the first Baltic state to reach this milestone. momentum in 1998. However, the
current account deficit has hovered
around 8% to 10% of GDP annually
since 1995-the 1995--the result of greater
demand for consumer goods and falling
growth in exports. Reducing
this deficit is the immediate economic challenge for 1999.

Lithuania, the Baltic state that has conducted the most trade with Russia, faced its own economic and financial crisis in 1999 as a result of the government's wrongfooted economic policies and its inadequate response to has been slowly rebounding from the August 1998 Russian financial crisis. Preliminary figures indicate 3% negative GDP growth, 10% High unemployment and weak consumption have held back recovery. GDP growth for 2000 - estimated at 2.9% - fell behind that of Estonia and Latvia, and unemployment is estimated at 10.8%, the country's highest level since regaining independence in 1991 - 1990. For 2001, Lithuanians forecast 3.2% growth, 1.8% inflation, and a budget fiscal deficit estimated at between 8 and 9% of GDP. The policies 3.3%. In early 2001, the Lithuanian Government announced that Prime Minister KUBILIUS implemented upon taking it will repeg its currency, the helm in November 1999 underscore a commitment litas, to fiscal restraint, economic stabilization, and accelerated reforms. The austere 2000 budget the euro (the litas is currently pegged to the dollar) some time in based on a 2% GDP growth forecast, 3% inflation, 2002. Lithuania must ratify 25 agreements along with other legal documents and a 2.8% budget deficit. obligations by 1 May 2001 before gaining World Trade Organization membership. Lithuania was invited at to the Helsinki EU summit in December 1999 to begin and began EU accession talks in early 2000. Privatization of the large large, state-owned utilities, particularly in the energy sector, and reducing the high current account deficit remain challenges remains a key challenge for the coming year. 2001.

Lithuania, the Baltic state that has conducted the most trade with Russia, has been slowly rebounding rebounded from the 1998 Russian financial crisis. High unemployment, Unemployment remains high, still 12% 10.7% in 2002, and weak 2003, but is improving. Growing domestic consumption and increased investment have held back furthered recovery. Trade has been increasingly oriented toward the West. Lithuania has gained membership in the World Trade Organization and has moved ahead with plans to join the EU. Privatization of the large, state-owned utilities, particularly in the energy sector, is underway. nearing completion. Overall, more than 80% of enterprises have been privatized. The US Foreign government and business aid support have helped in the transition from the old command economy to a market economy.

Lithuania, the Baltic state that has conducted the most trade with Russia, has slowly rebounded from the 1998 Russian financial crisis. Unemployment remains high, still 10.7% dropped from 11% in 2003, but is improving. 2003 to 8% in 2004. Growing domestic consumption and increased investment have furthered recovery. Trade has been increasingly oriented toward the West. Lithuania has gained membership in the World Trade Organization and has moved ahead with plans to join joined the EU. EU in May 2004. Privatization of the large, state-owned utilities, particularly in the energy sector, is nearing completion. Overall, more than 80% of enterprises have been privatized. Foreign government and business support have helped in the transition from the old command economy to a market economy.

Lithuania, the Baltic state that has conducted the most trade with Russia, has slowly rebounded from the 1998 Russian financial crisis. Unemployment dropped from 11% in 2003 to about 8% in 2004. 2005. Growing domestic consumption and increased investment have furthered recovery. Trade has been increasingly oriented toward the West. Lithuania has gained membership in the World Trade Organization and joined the EU in May 2004. Privatization of the large, state-owned utilities, particularly in the energy sector, is nearing completion. Overall, more than 80% of enterprises have been privatized. Foreign government and business support have helped in the transition from the old command economy to a market economy.

Lithuania, the Baltic state that has conducted the most trade with Russia, has slowly rebounded grown rapidly since rebounding from the 1998 Russian financial crisis. Unemployment dropped from 11% in 2003 fell to about 8% 3.7% in 2005. Growing domestic consumption 2006, while wages grew 17.6%, contributing to rising inflation. Exports and increased investment have furthered recovery. imports continue to grow strongly, and the current account deficit rose to nearly 10% of GDP in 2006. Trade has been increasingly oriented toward the West. Lithuania has gained membership in the World Trade Organization and joined the EU in May 2004. Privatization of the large, state-owned utilities, particularly in the energy sector, utilities is nearing completion. Overall, more than 80% of enterprises have been privatized. nearly complete. Foreign government and business support have helped in the transition from the old command economy to a market economy. economy, but foreign direct investment declined in 2006.

Lithuania, the Baltic state that has conducted the most trade with Russia, has grown rapidly since rebounding from the 1998 Russian financial crisis. Unemployment fell to 3.7% 3.2% in 2006, 2007 while wages grew 17.6%, continued to grow at double digit rates, contributing to rising inflation. Exports and imports continue to grow also grew strongly, and the current account deficit rose to nearly 10% 15% of GDP in 2006. 2007. Trade has been increasingly oriented toward the West. Lithuania has gained membership in the World Trade Organization and joined the EU in May 2004. Privatization of the large, state-owned utilities is nearly complete. Foreign government and business support have helped in the transition from the old command economy to a market economy, but foreign direct investment declined in 2006. economy.

Lithuania, the Baltic state that has conducted the most trade with Russia, has grown rapidly since rebounding from Lithuania's economy grew on average 8% per year for the 1998 Russian financial crisis. Unemployment fell four years prior to 3.2% 2008, driven by exports and domestic consumer demand. Unemployment stood at 4.8% in 2007 2008, while wages continued to grow grew at double digit rates, contributing to rising inflation. Exports and imports also grew strongly, and the rates. The current account deficit rose to nearly roughly 15% of GDP in 2007. Trade has been increasingly oriented toward the West. 2007-08. Lithuania has gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania's EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a growing percentage of total trade. Privatization of the large, state-owned utilities is nearly complete. Foreign government and business support have helped in the transition from the old command economy to a market economy.

Lithuania's economy grew on average 8% per year for the four years prior to 2008, driven by exports and domestic consumer demand. Unemployment stood at 4.8% in 2008, while wages grew at double digit rates. The current account deficit rose to roughly 15% of GDP in 2007-08. Lithuania has gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania's EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a growing percentage of total trade. Privatization of the large, state-owned utilities is nearly complete. Foreign government and business support have helped in the transition from the old command economy to a market economy. Lithuania's economy grew on average 8% per year for the four years prior to 2008 driven by exports and domestic demand. However, GDP plunged nearly 15% in 2009 - during the 2008-09 crisis the three former Soviet Baltic republics had the world's worst economic declines. In 2009, the government launched a high-profile campaign, led by Prime Minister KUBILIUS, to attract foreign investment and to develop export markets. The current account deficit, which had risen to roughly 15% of GDP in 2007-08, recovered to a surplus of 4% 2009 and 3.5% in 2010 in the wake of a cutback in imports to almost half the 2008 level. Nevertheless, economic growth was flat and unemployment continued upward to 16% in 2010.

Lithuania gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania's EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a growing percentage of total trade. Privatization of the large, state-owned utilities is nearly complete. Foreign government and business support have helped in the transition from the old command economy to a market economy. Lithuania's economy grew on average 8% per year for the four years prior to 2008 driven by exports and domestic demand. However, GDP plunged nearly 15% in 2009 - during the 2008-09 crisis the three former Soviet Baltic republics had the world's worst economic declines. In 2009, the government launched a high-profile campaign, led by Prime Minister KUBILIUS, to attract foreign investment and to develop export markets. The current account deficit, which had risen to roughly 15% of GDP in 2007-08, recovered to a surplus of 4% 2009 and 3.5% 3.4% in 2010 in the wake of a cutback in imports to almost half the 2008 level. Nevertheless, economic growth was flat and unemployment continued upward to 16% 17.9% in 2010.

Lithuania gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania's EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a growing percentage significant share of total trade. Privatization of the large, state-owned utilities is nearly complete. Foreign government investment and business support have helped in the transition from the old command economy to a market economy. Lithuania's economy grew on average 8% per year for the four years prior to 2008 driven by exports and domestic demand. However, GDP plunged nearly 15% in 2009 - during the 2008-09 crisis the three former Soviet Baltic republics had the world's worst economic declines. In 2009, were among the government launched a high-profile campaign, led hardest hit by Prime Minister KUBILIUS, the 2008-09 financial crisis. The government's efforts to attract foreign investment and to investment, develop export markets. The current account deficit, which had risen markets, and to roughly 15% of GDP in 2007-08, recovered pursue broad economic reforms has been key to Lithuania's quick recovery from a surplus deep recession making Lithuania one of 4% 2009 and 3.4% in 2010 in the wake of a cutback fastest growing economies in imports to almost half the 2008 level. Nevertheless, economic growth was flat and EU. However, unemployment continued upward to 17.9% - at 15.8% in 2010. 2012 - remains stubbornly high.

Lithuania gained membership in the World Trade Organization and joined the EU in May 2004. Despite Lithuania's its EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a significant share of total trade. Foreign investment and business support have helped in the transition from the old command economy to a market economy. Lithuania's economy grew on average 8% per year for the four years prior to 2008 driven by exports and domestic demand. However, Lithuania''s GDP plunged nearly 15% in 2009 - the 2009. The three former Soviet Baltic republics were among the hardest hit by the 2008-09 financial crisis. The government's government''s efforts to attract foreign investment, to develop export markets, and to pursue broad economic reforms has been key to Lithuania's Lithuania''s quick recovery from a deep recession recession, making Lithuania one of the fastest growing economies in the EU. However, Lithuania is committed to meeting the Maastricht criteria to join the euro zone, which the government expects to achieve by 2015. Under the Conservative Party''s leadership, Lithuania raised the monthly minimum wage in 2012 nearly 25% over 2011. Despite government efforts, unemployment - at 15.8% 13.2% in 2012 - remains stubbornly high.

Lithuania gained membership in the World Trade Organization and joined the EU in May 2004. Despite its EU accession, Lithuania's trade with its Central and Eastern European neighbors, and Russia in particular, accounts for a significant share of total trade. Foreign investment and business support have helped in the transition from the old command economy to a market economy. Lithuania's economy grew on average 8% per year for the four years prior to 2008 driven by exports and domestic demand. Lithuania''s GDP plunged nearly 15% in 2009. The three former Soviet Baltic republics were among the hardest hit by the 2008-09 financial crisis. The government''s government's efforts to attract foreign investment, to develop export markets, and to pursue broad economic reforms has been key to Lithuania''s Lithuania's quick recovery from a deep recession, making Lithuania one of the fastest growing economies in the EU. Lithuania is committed to meeting the Maastricht criteria to join the euro zone, which the government expects to achieve by 2015. Under the Conservative Party''s Party's leadership, Lithuania raised the monthly minimum wage in January 2012 nearly 25% over 2011. In January 2013, the new Social Democrat-led government increased the minimum wage another 25% over January 2012. Despite government efforts, unemployment - at 13.2% in 2012 - remains high.

Lithuania gained membership in the World Trade Organization in May 2001 and joined the EU in May 2004. Despite its EU accession, Lithuania's trade with its Central and Eastern European neighbors, the EU and Russia in particular, CIS countries accounts for a significant share approximately 87.3% of total trade. Foreign investment and business support EU funding have helped aided in the transition from the old command former planned economy to a market economy. The three former Soviet Baltic republics were among the hardest severely hit by the 2008-09 financial crisis. The government's efforts to attract foreign investment, to develop export markets, and to pursue broad economic reforms has been key to Lithuania's quick recovery from a deep recession, making crisis, but Lithuania has rebounded and become one of the fastest growing economies in the EU. Lithuania is committed to meeting the Maastricht criteria to join the euro zone, Lithuania’s ongoing recovery hinges on export growth, which the government expects to achieve is being hampered by 2015. Under the Conservative Party's leadership, Lithuania raised the monthly minimum wage economic slowdowns in January 2012 nearly 25% over 2011. In January 2013, the new Social Democrat-led government increased EU and Russia. Lithuania joined the minimum wage another 25% over euro zone on 1 January 2012. Despite government efforts, unemployment remains high. 2015.

Lithuania gained membership in the World Trade Organization WTO in May 2001 and joined the EU in May 2004. Lithuania's trade with the EU and CIS countries accounts for approximately 87.3% of total trade. Foreign investment and EU funding have aided in the transition from the former planned economy to a market economy. The three former Soviet Baltic republics were severely hit by the 2008-09 financial crisis, but Lithuania has rebounded and become one of the fastest growing economies in the EU. Lithuania’s ongoing recovery hinges on export growth, which is being hampered by economic slowdowns in the EU and Russia. Lithuania joined the euro zone on 1 January 2015. 2015 and is under review for membership in the OECD.

After the country declared independence from the Soviet Union in 1990, Lithuania faced an initial dislocation that is typical during transitions from a planned economy to a free-market economy. Macroeconomic stabilization policies, including privatization of most state-owned enterprises, and a strong commitment to a currency board arrangement led to an open and rapidly growing economy and rising consumer demand. Foreign investment and EU funding aided in the transition. Lithuania joined the WTO in May 2001, the EU in May 2004, and the euro zone in January 2015, and is now working to complete the OECD accession roadmap it received in July 2015.
In 2017, joined the OECD Working Group on Bribery, an important step in the OECD accession process. The Lithuanian economy was severely hit by the 2008-09 global financial crisis, but it has rebounded and become one of the fastest growing in the EU. Increases in exports, investment, and wage growth that supported consumption helped the economy grow by 3.6% in 2017. In 2015, Russia was Lithuania’s largest trading partner, followed by Poland, Germany, and Latvia; goods and services trade between the US and Lithuania totaled $2.2 billion.
Lithuania opened a self-financed liquefied natural gas terminal in January 2015, providing the first non-Russian supply of natural gas to the Baltic States and reducing Lithuania’s dependence on Russian gas from 100% to approximately 30% in 2016. Lithuania’s ongoing recovery hinges on improving the business environment, especially by liberalizing labor laws, and improving competitiveness and export growth, the latter of which has been hampered by economic slowdowns in the EU and Russia. In addition, a steady outflow of young and highly educated people is causing a shortage of skilled labor. Lithuania opened labor, which, combined with a self-financed liquefied natural gas terminal in January 2015, providing the first non-Russian supply of natural gas to the Baltic States rapidly aging population, could stress public finances and reducing Lithuania’s dependence on Russian gas from 100% to approximately 30% in 2016. constrain long-term growth.

After the country declared independence from the Soviet Union in 1990, Lithuania faced an initial dislocation that is typical during transitions from a planned economy to a free-market economy. Macroeconomic stabilization policies, including privatization of most state-owned enterprises, and a strong commitment to a currency board arrangement led to an open and rapidly growing economy and rising consumer demand. Foreign investment and EU funding aided in the transition. Lithuania joined the WTO in May 2001, the EU in May 2004, and the euro zone in January 2015, and is now working to complete the OECD accession roadmap it received in July 2015. In 2017, joined the OECD Working Group on Bribery, an important step in the OECD accession process.
The Lithuanian economy was severely hit by the 2008-09 global financial crisis, but it has rebounded and become one of the fastest growing in the EU. Increases in exports, investment, and wage growth that supported consumption helped the economy grow by 3.6% in 2017. In 2015, Russia was Lithuania’s largest trading partner, followed by Poland, Germany, and Latvia; goods and services trade between the US and Lithuania totaled $2.2 billion. Lithuania opened a self-financed liquefied natural gas terminal in January 2015, providing the first non-Russian supply of natural gas to the Baltic States and reducing Lithuania’s dependence on Russian gas from 100% to approximately 30% in 2016.
Lithuania’s ongoing recovery hinges on improving the business environment, especially by liberalizing labor laws, and improving competitiveness and export growth, the latter hampered by economic slowdowns in the EU and Russia. In addition, a steady outflow of young and highly educated people is causing a shortage of skilled labor, which, combined with a rapidly aging population, could stress public finances and constrain long-term growth.

high-income EU and eurozone member, largest Baltic economy; growth stalled due to Ukraine war impact on energy, exports, and fiscal spending for defense and refugee support; rebound recovery supported by private consumption and EU fund-driven investments and reduced inflation; investments; structural challenges include pension reform, labor market inefficiencies, health care, aging workforce, and education spending high energy-import costs