LITHUANIA


The largest of the three Baltic republics of the former Soviet Union
The biggest economy among the Baltic states, generating roughly half of this region’s GDP
Most diversified industry in the Baltics

Total area: 65,200 sq km (slightly larger than Belgium, Denmark, the Netherlands, Switzerland or West Virginia)
Population:  2.8 million
Government type: Parliamentary democracy
Administrative division: 10 counties (called „apskritys“) further subdivided into 60 municipalities (called “savivaldybe”)
Capital + other major cities: Vilnius (540,000) + Kaunas (304,000), Klaipeda (157,000), Šiaulilai (106,000)
Currency: formerly litas (LTL), adopted the euro in January 2015
Languages: Lithuanian (official) 82%, Russian 8%, Polish 5.6%, other 0.9%, unspecified 3.5%
Ethnicity: Lithuanian 84.1%, Polish 6.6%, Russian 5.8%, Belarusian 1.2%, other 1.1%, unspecified 1.2%
Religion: Roman Catholic 77.2%, Russian Orthodox 4.1%, Old Believer 0.8%, Evangelical Lutheran 0.6%, Evangelical Reformist 0.2%, other 0.8%, none 6.1%, unspecified 10.1%
President: (Mr.) Gitanas Nauseda (since 12 July 2019)
Prime Minister: (Mr.) Saulius Skvernelis (since 13 December 2016)
Date of EU accession: 1 May 2004
mapa



KEY FEATURES

  • Personal income tax (15%) and corporate tax (15%) rates in Lithuania are among the lowest in the EU
  • Lasers and biotechnology are flagship fields of the Lithuanian science and high tech industry
  • 90% of Lithuanians speak a second language and 30% of population are university-educated
  • Last Baltic country to adopt the euro (January 2015)

MACROECONOMIC OVERVIEW

Lithuania is an open, dynamic and fast developing country, at the geographical centre of Europe. It is an ideal location for logistics, given its position at the crossroads of western and central Europe, Nordic & Baltic region, and Russia and the CIS.


As a member of the EU since 2004, the country has experienced significant growth coupled with the rapid modernisation of its economy. However, Lithuania was affected by the financial crisis, with its GDP falling by 16.8% in 2009. Nonetheless, the country has since experienced the fastest recovery in Europe, partly fuelled by a well-performing banking system and a diversified industrial sector. In 2018, GDP growth stood at 3.5% - from 3.9% the previous year – thanks to increases in industrial production, construction, wholesale and retail trade. Growth should follow a downward trend in the next years (2.9% in 2019 and 2.7% in 2020 according to IMF estimates), due to the impact of weaker economic performance in its main trading partners (with its small-scale economy, Lithuania is really sensitive to external factors).


Lithuania’s ongoing recovery hinges on improving the business environment, especially by liberalizing labour 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 labour, which, combined with a rapidly aging population, could stress public finances and constrain long-term growth.



Selected economic indicators, Lithuania, 2010 - 2016

    2012 2013 2014 2015 2016 2017 2018
GDP
Real GDP growth
%
3.8
3.5
3.0
1.6
2.4
4.1
3.5
GDP at current prices
€ bn
33.33
34.96
36.44
37.12
38.85
42.19
45.11
Foreign trade
Exports
€ bn
27.22
29.39
29.60
28.38
28.79
34.13
37.12
Imports
€ bn
26.93
28.95
28.90
28.51
28.29
32.95
35.94
Balance
€ bn
0.29
0.48
0.70
-0.12
0.50
1.18
1.18
Prices
CPI - average inflation rate
%
3.2
1.2
0.2
-0.7
0.7
3.7
2.5
PPI - industry - average
%
5.0
-2.4
-4.9
-9.7
-4.4
5.1
5.6
Employment
Registered unemployment
%
13.4
11.8
10.7
9.1
7.9
7.1
5.6
Average monthly gross wage
615
646
677
714
784
847
932
Exchange rates
LTD/USD average
2.6868
2.6006
2.6021
-
-
-
-
LTD/EUR average
3.4528
3.4528
3.4528
-
-
-
-


Source: Department of Statistics to the Government of the Republic of Lithuania, IMF, Eurostat, 2017-2018



STRUCTURE OF ECONOMY - KEY SECTORS


Lithuania's well-developed industrial base includes the wood processing, chemicals, machine tools, metal processing, construction materials, biotechnology, food processing as well as light industries, including the manufacture of textiles, clothing, furniture and household appliances. Lithuania’s industry is well complemented by strong transportation and service sectors.

Manufacturing, construction, transportation, financial intermediation, and real estate ranked among the fastest growing sectors in the economy of Lithuania. Structurally, there is a gradual but consistent shift towards a knowledge-based economy with special emphasis on biotechnology (industrial and diagnostic). The major biotechnology companies and laser manufacturers (Ekspla, Šviesos Konversija) of the Baltics are concentrated in Lithuania. Also mechatronics and information technology (IT) are seen as prospective knowledge-based economy directions.


Energy Industry

As Lithuania is the only Baltic state with a nuclear power plant, the country has developed an important energy industry. It has also become an important hub for the transport of oil from the east to Western Europe due to its strategic location on the Baltic coast. Furthermore, the country has become a transit route for natural gas and the country’s energy infrastructure is currently being linked up with the other countries of Central and Eastern Europe.


Laser Technology Industry

Lithuania has established itself as a global leader in the laser technology industry with 80% of the world’s market share for high-energy pico-second lasers, and it is also the world leader in terms of ultra-fast parametric light generator production. The laser technology industry has been helped by investment in research and development and there are currently 11 science, research and development centres dedicated to research in this specific industry.


Services and ICT Industry

The services industry as a whole accounts for 61% of Lithuania’s GDP. Major companies have relocated many of their services operations to Lithuania including Barclays, CSC, SEB, Transcom, Unicall and Storebrand. In recent years Lithuania’s economy has undergone transition to become a knowledge-based and multilingual labour force. According to government statistics, 90% of Lithuanians speak a second language and 30% of the population are university-educated.


EXPORTS & IMPORTS


2017 export and import data:


On average, more than 95% of all foreign direct investment in Lithuania comes from European Union countries. Sweden is historically the largest investor with 20% – 30% of all FDI in Lithuania. FDI into Lithuania spiked in 2017, reaching its highest ever recorded number of greenfield investment projects. In 2017, Lithuania was third country, after Ireland and Singapore by the average job value of investment projects. The US was the leading source country in 2017, 24.59% of total FDI. Next up are Germany and the UK, each representing 11.48% of total project numbers. Based on the Eurostat's data, in 2017, the value of Lithuanian exports recorded the most rapid growth not only in the Baltic countries, but also across Europe, which was 16.9 per cent.


Main import partners:
Russia – 13%
Germany – 12.3%
Poland – 10.6%
Latvia – 7.1%
Italy – 5.2%
Netherlands – 5.1%


Main export partners:
Russia – 15%
Latvia – 9.9%
Poland – 8.1%
Germany – 7.3%
US – 5.2%
Estonia – 5%


Lithuania external trade - 2015




See references for our track record in Lithuania.



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