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The economy of Lithuania is the largest economy among the three
Baltic states The Baltic states, et, Balti riigid or the Baltic countries is a geopolitical term, which currently is used to group three countries: Estonia, Latvia, and Lithuania. All three countries are members of NATO, the European Union, the Eurozone, ...
.
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
is a member of the
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been ...
and belongs to the group of very high
human development Human development may refer to: * Development of the human body * Developmental psychology * Human development (economics) * Human Development Index, an index used to rank countries by level of human development * Human evolution, the prehistoric ...
countries and is a member of the
WTO The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...
and
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
. In the 1990s, Lithuania rapidly moved from a centrally
planned economy A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, pa ...
to a
market economy A market economy is an economic system in which the decisions regarding investment, production and distribution to the consumers are guided by the price signals created by the forces of supply and demand, where all suppliers and consumers are ...
, implementing numerous liberal reforms. It enjoyed high growth rates after joining the European Union along with the other Baltic states, leading to the notion of a
Baltic Tiger Baltic Tiger is a term used to refer to any of the three Baltic states of Estonia, Latvia, and Lithuania during their periods of economic boom, which started after the year 2000 and continued until 2006–2007. The term is modeled on Four Asi ...
. Lithuania's economy (GDP) grew more than 500 percent since regaining independence in 1990. The Baltic states have a combined workforce of 3.3 million people, with 1.4 million of these working people living in Lithuania. GDP growth reached its peak in 2008, and was approaching the same levels again in 2018. Similar to the other Baltic States, the Lithuanian economy suffered a deep recession in 2009, with GDP falling by almost 15%. After this severe recession, the country's economy started to show signs of recovery already in the 3rd quarter of 2009. It returned to growth in 2010, with a positive 1.3 outcome and with 6.6 per cent growth during the first half of 2011. The country is one of the fastest growing economies in the EU. GDP growth had resumed in 2010, albeit at a slower pace than before the crisis. The success of the crisis taming is attributed to the
austerity Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
policy of the Lithuanian government. Lithuania has a sound fiscal position. The 2017 budget resulted in a 0.5% surplus, with the gross debt stabilising at around 40% of the GDP. The budget remained positive in 2017, and was expected to continue to do so in 2018. Lithuania is ranked 11th in the world in the
Ease of Doing Business Index The ease of doing business index was an index created jointly by Simeon Djankov, Michael Klein, and Caralee McLiesh, three leading economists at the World Bank Group. The academic research for the report was done jointly with professors Edward Gl ...
prepared by the
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group ...
, 16th out of 178 countries in the
Index of Economic Freedom The ''Index of Economic Freedom'' is an annual index and ranking created in 1995 by The Heritage Foundation and ''The Wall Street Journal'' to measure the degree of economic freedom in the world's nations. The creators of the index claim to tak ...
, measured by
The Heritage Foundation The Heritage Foundation (abbreviated to Heritage) is an American conservative think tank based in Washington, D.C. that is primarily geared toward public policy. The foundation took a leading role in the conservative movement during the presiden ...
and 8th out of 165 countries in the
Economic Freedom of the World ''Economic Freedom of the World'' is an annual survey published by the Canadian think tank Fraser Institute. ; ; The survey attempts to measure the degree of economic freedom in the world's nations. It has been used in peer-reviewed studies som ...
2021 by
Fraser Institute The Fraser Institute is a libertarian-conservative Canadian public policy think tank and registered charity. The institute describes itself as independent and non-partisan. It is headquartered in Vancouver, with additional offices in Calgary, Tor ...
. On average, more than 95% of all
foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...
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 the third country, after the
Republic of Ireland Ireland ( ga, Éire ), also known as the Republic of Ireland (), is a country in north-western Europe consisting of 26 of the 32 counties of the island of Ireland. The capital and largest city is Dublin, on the eastern side of the island. ...
and
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borderin ...
by the average job value of investment projects. Based on OECD data, Lithuania is among the top 5 countries in the world by postsecondary (tertiary) education attainment. This educated workforce attracted investments, especially in the ICT sector during the past years. The Lithuanian government and the
Bank of Lithuania The Bank of Lithuania ( lt, Lietuvos bankas) is the central bank of the Republic of Lithuania. The Bank of Lithuania is a member of the European System of Central Banks. The chairman of the bank is Gediminas Šimkus. Until 2015, the Bank of Li ...
simplified procedures for obtaining licences for the activities of e-money and payment institutions. positioning the country as one of the most attractive for the
financial technology Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are ...
initiatives in the EU.


History of economy

The history of Lithuania can be divided into seven major periods. All the periods have some interesting and important facts that affected the economic situation of the country in those times. *Ancient times – Baltic tribes (until the 13th century) *
Kingdom of Lithuania The Kingdom of Lithuania was a Lithuanian state, which existed roughly from 1251 to 1263. King Mindaugas was the first and only Lithuanian monarch crowned King of Lithuania with the assent of the Pope. The formation of the Kingdom of Lithuania ...
(1251–1263) *
Grand Duchy of Lithuania The Grand Duchy of Lithuania was a European state that existed from the 13th century to 1795, when the territory was partitioned among the Russian Empire, the Kingdom of Prussia, and the Habsburg Empire of Austria. The state was founded by Lit ...
(1263–1569) *
Polish–Lithuanian Commonwealth The Polish–Lithuanian Commonwealth, formally known as the Kingdom of Poland and the Grand Duchy of Lithuania, and, after 1791, as the Commonwealth of Poland, was a bi-confederal state, sometimes called a federation, of Poland and Lithuania rul ...
(1569–1795) *Pressure of the
Russian Empire The Russian Empire was an empire and the final period of the Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended the Great Northern War. The ...
(1795–1914) *Republic of Lithuania during the
interwar period In the history of the 20th century, the interwar period lasted from 11 November 1918 to 1 September 1939 (20 years, 9 months, 21 days), the end of the First World War to the beginning of the Second World War. The interwar period was relative ...
(1918–1940) * Soviet occupied Lithuania (1944–1990) *Republic of Lithuania (1990–)


History up to the 20th century

The first Lithuanians formed a branch of an ancient ethno-linguistic group known as the
Balts The Balts or Baltic peoples ( lt, baltai, lv, balti) are an ethno-linguistic group of peoples who speak the Baltic languages of the Balto-Slavic branch of the Indo-European languages. One of the features of Baltic languages is the number o ...
. Lithuanian tribes maintained close trade contacts with the
Roman Empire The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Roman Republic, Republican period of ancient Rome. As a polity, it included large territorial holdings aro ...
.
Amber Amber is fossilized tree resin that has been appreciated for its color and natural beauty since Neolithic times. Much valued from antiquity to the present as a gemstone, amber is made into a variety of decorative objects."Amber" (2004). In Ma ...
was the main good provided to the
Roman Empire The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Roman Republic, Republican period of ancient Rome. As a polity, it included large territorial holdings aro ...
from Baltic Sea coast, via a long route called the
Amber Road The Amber Road was an ancient trade route for the transfer of amber from coastal areas of the North Sea and the Baltic Sea to the Mediterranean Sea. Prehistoric trade routes between Northern and Southern Europe were defined by the amber trade. ...
. Consolidation of the Lithuanian lands began in the late 12th century. King
Mindaugas Mindaugas (german: Myndowen, la, Mindowe, orv, Мендог, be, Міндоўг, pl, Mendog, c. 1203–1263) is the first known Grand Duke of Lithuania and the only crowned King of Lithuania. Little is known of his origins, early life, or r ...
was the first Catholic
King of Lithuania The monarchy of Lithuania concerned the monarchical head of state of Lithuania, which was established as an absolute and hereditary monarchy. Throughout Lithuania's history there were three ducal dynasties that managed to stay in power—House ...
in 1253. The expansion of the
Grand Duchy of Lithuania The Grand Duchy of Lithuania was a European state that existed from the 13th century to 1795, when the territory was partitioned among the Russian Empire, the Kingdom of Prussia, and the Habsburg Empire of Austria. The state was founded by Lit ...
reached its height in the middle of the 14th century under the
Grand Duke Grand duke (feminine: grand duchess) is a European hereditary title, used either by certain monarchs or by members of certain monarchs' families. In status, a grand duke traditionally ranks in order of precedence below an emperor, as an approxi ...
Gediminas Gediminas ( la, Gedeminne, ; – December 1341) was the king or Grand Duke of Lithuania from 1315 or 1316 until his death. He is credited with founding this political entity and expanding its territory which later spanned the area ranging from ...
(reigned 1316–1341), who established a strong central government which later came to dominate the territories from the Baltic Sea to the Black Sea. Grand Duke Gediminas issued letters to the
Hanseatic league The Hanseatic League (; gml, Hanse, , ; german: label=Modern German, Deutsche Hanse) was a medieval commercial and defensive confederation of merchant guilds and market towns in Central and Northern Europe. Growing from a few North German t ...
, offering free access to his domains for men of every order and profession from nobles and
knights A knight is a person granted an honorary title of knighthood by a head of state (including the Pope) or representative for service to the monarch, the Christian denomination, church or the country, especially in a military capacity. Knighthood ...
to tillers of the soil. Economic immigrants and immigrants, seeking religious freedom improved the level of handicrafts. During the reign of Duke
Kęstutis Kęstutis ( la, Kinstut, ; – 3 or 15 August 1382) was the Grand Duke of Lithuania. He was the Duke of Trakai and governed the Grand Duchy of Lithuania, 1342–1382, together with his brother Algirdas (until 1377), and with his nephew Jogaila ...
(1297–1382), the first cash taxes were introduced, although most taxes were still paid in goods (e.g., wheat, cattle, horses). In 1569 the
Polish–Lithuanian Commonwealth The Polish–Lithuanian Commonwealth, formally known as the Kingdom of Poland and the Grand Duchy of Lithuania, and, after 1791, as the Commonwealth of Poland, was a bi-confederal state, sometimes called a federation, of Poland and Lithuania rul ...
formed through the union of the
Kingdom of Poland The Kingdom of Poland ( pl, Królestwo Polskie; Latin: ''Regnum Poloniae'') was a state in Central Europe. It may refer to: Historical political entities *Kingdom of Poland, a kingdom existing from 1025 to 1031 *Kingdom of Poland, a kingdom exis ...
and the Grand Duchy of Lithuania. The economy of the Commonwealth was dominated by feudal agriculture based on the exploitation of the agricultural workforce (serfs). Poland–Lithuania played a significant role in supplying 16th-century Western Europe with exports of three sorts of goods: grain (rye), cattle (oxen) and fur. These three articles amounted to nearly 90% of the country's exports to western markets by overland and maritime trade. There was even a Lithuanian trading vessel –
vytinė Vytinė (from Lithuanian ''vytelė'' - ''withe'', ''twig'') was a type of Lithuanian trading vessel used from the 15th century up to the 20th century. It was a flat-bottomed, river-borne sailboat, 30-55 m long. Vytinė ships mainly transport ...
, used for four hundred years to transport grain via Nemunas river.
Statutes of Lithuania The Statutes of Lithuania, originally known as the Statutes of the Grand Duchy of Lithuania, were a 16th-century codification of all the legislation of the Grand Duchy of Lithuania and its successor, the Polish–Lithuanian Commonwealth. The Stat ...
were the main collections of law statements and rules in Lithuania. The Commonwealth was famous for Europe's first and the world's second modern codified national constitution, the so-called
Constitution of 3 May The Constitution of 3 May 1791,; lt, Gegužės trečiosios konstitucija titled the Governance Act, was a constitution adopted by the Great Sejm ("Four-Year Sejm", meeting in 1788–1792) for the Polish–Lithuanian Commonwealth, a dual mo ...
, declared on 3 May 1791 (after the 1788 ratification of the
United States Constitution The Constitution of the United States is the supreme law of the United States of America. It superseded the Articles of Confederation, the nation's first constitution, in 1789. Originally comprising seven articles, it delineates the nation ...
). Economic and commercial reforms, previously shunned as unimportant by the Szlachta, were introduced, and the development of industries was encouraged. Following the
partitions of the Polish–Lithuanian Commonwealth The Partitions of Poland were three partitions of the Polish–Lithuanian Commonwealth that took place toward the end of the 18th century and ended the existence of the state, resulting in the elimination of sovereign Poland and Lithuania for 1 ...
in 1772, 1793 and 1795, the
Russian Empire The Russian Empire was an empire and the final period of the Russian monarchy from 1721 to 1917, ruling across large parts of Eurasia. It succeeded the Tsardom of Russia following the Treaty of Nystad, which ended the Great Northern War. The ...
controlled the majority of Lithuania. During the administration of the Lithuanian lands by the Russian Empire from 1772 to 1917, one of the most important events that affected economic relations was the
emancipation reform of 1861 The emancipation reform of 1861 in Russia, also known as the Edict of Emancipation of Russia, (russian: Крестьянская реформа 1861 года, translit=Krestyanskaya reforma 1861 goda – "peasants' reform of 1861") was the first ...
in Russia. The reform amounted to the liquidation of serf dependence previously suffered by peasants; it boosted the development of
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private pr ...
.


Lithuania in the 20th century

On 16 February 1918, the
Council of Lithuania The Council of Lithuania ( lt, Lietuvos Taryba, german: Litauischer Staatsrat, pl, Rada Litewska), after July 11, 1918 the State Council of Lithuania ( lt, Lietuvos Valstybės Taryba) was convened at the Vilnius Conference that took place betwe ...
passed a resolution for the re-establishment of the Independent State of Lithuania. Soon, many economic reforms for sustainable economic growth were implemented. A national currency, called the
Lithuanian litas The Lithuanian litas ( ISO currency code LTL, symbolized as Lt; plural ''litai'' (nominative) or ''litų'' (genitive) was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų (genit ...
, was introduced in 1922. It proved to become one of the strongest and most stable currencies in Europe during the inter-war period. Lithuania had a monometalism system where one litas was covered by 0.150462 grams of gold stored by the
Bank of Lithuania The Bank of Lithuania ( lt, Lietuvos bankas) is the central bank of the Republic of Lithuania. The Bank of Lithuania is a member of the European System of Central Banks. The chairman of the bank is Gediminas Šimkus. Until 2015, the Bank of Li ...
in foreign countries. Litas remained stable even in the period of
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagion ...
. During the time of its independence, 1918–1940, Lithuania made substantial progress. For example, Lithuania was the third-ranking flax producer and exporter in the world market (export of flax constituted about 30 percent of all export share), being surpassed only by Soviet Russia and Poland; Lithuanian farm products such as meat, dairy products, many kinds of grain, potatoes, etc. were of superior quality in the world market. Lithuanian farmers were joining into cooperative companies – e.g. ''Lietūkis'', ''Pienocentras'', ''Linas'', which helped farmers to process and sell their products more efficiently and profitably. Having taken advantage of favorable international developments, and driven by its foreign policy aims directed against Lithuanian statehood, the Union of Soviet Socialist Republics (USSR) occupied Lithuania in 1940. Land and the most important objects for the economy were nationalized, and most of the farms collectivized. Just after one year of occupation, poverty level, unemployment increased dramatically, lack of food products appeared. Later, many inefficient factories and industry companies, highly dependent on other regions of USSR, were established in Lithuania. Despite that, in 1990, GDP per capita of the
Lithuanian Soviet Socialist Republic The Lithuanian Soviet Socialist Republic (Lithuanian SSR; lt, Lietuvos Tarybų Socialistinė Respublika; russian: Литовская Советская Социалистическая Республика, Litovskaya Sovetskaya Sotsialistiche ...
was $8,591, which was above the average for the rest of the Soviet Union of $6,871 but lagging behind developed western countries. The Soviet era brought Lithuania intensive industrialization and economic integration into the USSR, although the level of technology and state concern for environmental, health, and labor issues lagged far behind Western standards. Urbanization increased from 39% in 1959 to 68% in 1989. From 1949 to 1952 the Soviets abolished private ownership in agriculture, establishing collective and state farms. Production declined and did not reach pre-war levels until the early 1960s. The intensification of agricultural production through intense chemical use and mechanization eventually doubled production but created additional ecological problems. This changed after independence, when farm production dropped due to difficulties in restructuring the agricultural sector. The overall damage, resulted from the Soviet occupation (including the loss of gross domestic product), estimated according to the UN recognised methodologies amounted to approximately US$800 billion; direct damage (including genocide and deportations of the citizens, property looting) estimation is US$20 billion. According to a 2019 study by economic historians, Lithuania had above average economic growth from 1937 to 1973 (when compared to other economies), but below average growth from 1973 to 1990.


Development since the 1990s

Reforms since the mid-1990s led to an open and rapidly growing economy. Open to global trade and investment, Lithuania now enjoys high degrees of business, fiscal, and financial freedom. Lithuania is a member of the EU and the
WTO The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...
, so regulation is relatively transparent and efficient, with foreign and domestic capital subject to the same rules. The financial sector is advanced, regionally integrated, and subject to few intrusive regulations. One of Lithuania's most important reforms was the
privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of state-owned assets. The first stage of privatization was being implemented between 1991 and 1995. Citizens were given investment vouchers worth €3.1 billion in nominal value, which let them participate in assets selling. By October 1995, they were used as follows: 65% for acquisition of shares; 19% for residential dwellings; 5% for agricultural properties; and 7% remained unused. More than 5,700 enterprises with €2.0 billion worth of state capital in book value were sold using four initial privatization methods: share offerings; auctions; best business plans competitions; and
hard currency In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value. Factors contributing to a currency's ''hard'' status might include the stability and ...
sales. The second privatization step began in 1995 by approving a new law that ensured greater diversity of privatization methods and that enabled participation in the selling process without vouchers. Between 1996 and 1998, 526 entities were sold for more than €0.7 billion. Before the reforms, the
public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, infra ...
totally dominated the economy, whereas the share of the private sector in GDP increased to over 70% by the 2000 and 80% in 2011.
Monetary reform Monetary reform is any movement or theory that proposes a system of supplying money and financing the economy that is different from the current system. Monetary reformers may advocate any of the following, among other proposals: * A return t ...
was undertaken in the early nineties to improve the stability of the economy. Lithuania chose a currency board system controlled by the Bank of Lithuania independent of any government institution. On 25 June 1993, the
Lithuanian litas The Lithuanian litas ( ISO currency code LTL, symbolized as Lt; plural ''litai'' (nominative) or ''litų'' (genitive) was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų (genit ...
was introduced as a freely convertible currency, but on 1 April 1994 it was pegged to the United States dollar at a rate of 4 to 1. The mechanism of the
currency board In public finance, a currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the excha ...
system enabled Lithuania to stabilize inflation rates to single digits. The stable currency rate helped to establish foreign economic relations, therefore leading to a constant growth of foreign trade. By 1998, the economy had survived the early years of uncertainty and several setbacks, including a banking crisis. However, the collapse of the Russian ruble in August 1998 shocked the economy into negative growth and forced the reorientation of trade from Russia towards the West. Lithuania was invited to the Helsinki EU summit in December 1999 to begin EU accession talks in early 2000. After the Russian financial crisis, the focus of Lithuania's export markets shifted from East to West. In 1997, exports to the Soviet Union's successor entity (the Commonwealth of Independent States) made up 45% of total Lithuanian exports. This share of exports dropped to 21% of the total in 2006, while exports to EU members increased to 63% of the total. Exports to the United States made up 4.3% of all Lithuania's exports in 2006, and imports from the United States comprised 2% of total imports. Foreign direct investment (FDI) in 2005 was €0.8 billion. On 2 February 2002 the litas was pegged to the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens ...
at a rate of 3.4528 to 1, which remained until Lithuania adopted the euro in 2015. Lithuania was very close to introducing the euro in 2007, but the inflation level exceeded the Maastricht requirements. On 1 January 2015, Lithuania became the 19th country to use the euro. The Vilnius Stock Exchange, now renamed the
NASDAQ OMX Vilnius The Nasdaq Vilnius is a stock exchange established in 1993 (''Vilnius Stock Exchange'', ''VSE'') operating in Vilnius, Lithuania. It is owned by Nasdaq Nordic, which also operates Helsinki Stock Exchange and Stockholm Stock Exchange. OMX Vilnius ...
, started its activity in 1993 and was the first stock exchange in the Baltic states. In 2003, the VSE was acquired by OMX. Since 27 February 2008 the Vilnius Stock Exchange has been a member of NASDAQ OMX Group, which is the world's largest exchange company across six continents, with over 3,800 listed companies. The market cap of Vilnius Stock Exchange was €3.4 billion on 27 November 2009. During the last decade (1998–2008) the structure of Lithuania's economy has changed significantly. The biggest changes were recorded in the agricultural sector as the share of total employment decreased from 19.2% in 1998 to just 7.9% in 2008. The service sector plays an increasingly important role. The share of GDP in financial intermediation and real estate sectors was 17% in 2008 compared to 11% in 1998. The share of total employment in the financial sector in 2008 has doubled compared with 1998.Structure of gross value added by kind of economic activity and year


Lithuania in the 21st century

Between 2000 and 2017, the Lithuanian GDP grew by 308%. One of the most important factors contributing to Lithuania's economic growth was its accession to the
WTO The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...
in 2001 and the EU in 2004, which allows free movement of labour, capital, and trade among EU member states. On the other hand, rapid growth caused some imbalances in inflation and
balance of payments In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a ...
. The current account deficit to GDP ratio in 2006–2008 was in the double digits and reached its peak in the first quarter of 2008 at a threatening 18.8%. This was mostly due to rapid loan portfolio growth as Scandinavian banks provided cheap credit under quite lax rules in Lithuania. The volume of loans to acquire lodgings has grown from 50 million LTL in 2004 up to 720 million LTL in 2007. Consumption was affected by credit expansion as well. This led to high inflation of goods and services, as well as
trade deficit The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
. A
housing bubble A housing bubble (or a housing price bubble) is one of several types of asset price bubbles which periodically occur in the market. The basic concept of a housing bubble is the same as for other asset bubbles, consisting of two main phases. Firs ...
was formed. The global
credit crunch A credit crunch (also known as a credit squeeze, credit tightening or credit crisis) is a sudden reduction in the general availability of loans (or credit) or a sudden tightening of the conditions required to obtain a loan from banks. A credit cr ...
which started in 2008 affected the real estate and retail sectors. The construction sector shrank by 46.8% during the first three-quarters of 2009 and the slump in retail trade was almost 30%. GDP plunged by 15.7% in the first nine months of 2009. Lithuania was the last among the Baltic states to be hit by recession because its GDP growth rate in 2008 was still positive, followed by a slump of more than 15% in 2009. In the third quarter of 2009, compared to the previous quarter, GDP again grew by 6.1% after five-quarters with negative numbers. Austerity policy (four-fifths of the fiscal adjustment consisted of expenditure cuts) introduced by the Kubilius government helped to balance the current account from −15.5 in 2007 to 1.6 in 2009. Economic sentiment and confidence of all business activities have rebounded from a record low at the beginning of the year 2009. Sectors related to domestic consumption and real estate still suffer from the economic crisis, but exporters have started making profits even with lower levels of revenue. The catalysts of growing profit margins are lower raw material prices and staff expense. At the end of 2017, investment of Lithuania's enterprises abroad amounted to EUR 2.9 billion. The largest investment was made in Netherlands (24.1 per cent of the total direct investment abroad), Cyprus (19.8 per cent), Latvia (14.9 per cent), Poland (10.5 per cent) and Estonia (10.3 per cent). Lithuania's direct investment in the EU member states totalled EUR 2.6 billion, or 89.3 per cent of the total direct investment abroad. 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. Lithuania performs well in few measures of well-being in the Better Life Index by OECD, ranking above the average in education and skills, and work-life balance. It is below the average in income and wealth, jobs and earnings, housing, health status, social connections, civic engagement, environmental quality, personal security, and subjective well-being. Lithuanian people are the happiest people in the Baltic States.


Euro adoption

On 1 January 2015, Lithuania became the 19th country to adopt the euro. Joining the euro would relieve the Bank of Lithuania of defending the value of the litas, and "it would give Lithuania a say in the decision-making of the
European Central Bank The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important central b ...
(ECB), as well as access to the ECB single-resolution fund and cheaper borrowing costs".


Business climate

Cumulative foreign direct investment (FDI) in 2017 was EUR 14.7 billion, or 35 per cent of GDP, EUR 5215 per capita. The largest FDI flow in Lithuania was into manufacturing (EUR 73.7 million), agriculture, forestry, fishery (EUR 27.4 million), information and communication (EUR 10 million). Sweden, The Netherlands and Germany have remained the largest investors. Lithuania seeks to become an innovation hub by 2020. To reach this goal, it is putting its efforts into attracting FDI to added-value sectors, especially IT services, software development, consulting, finance, and logistics. Well-known international companies such as
Microsoft Microsoft Corporation is an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services headquartered at the Microsoft Redmond campus located in Redmond, Washingt ...
, IBM, Transcom,
Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...
, Siemens, SEB,
TeliaSonera Telia Company AB is a Swedish multinational telecommunications company and mobile network operator present in Sweden, Finland, Norway, Denmark, Estonia, Latvia and Lithuania. Telia also owns TV4 Media which includes TV4 in Sweden, MTV Oy in F ...
, Paroc, Wix.com,
Philip Morris Phil(l)ip or Phil Morris may refer to: Companies *Altria, a conglomerate company previously known as Philip Morris Companies Inc., named after the tobacconist **Philip Morris USA, a tobacco company wholly owned by Altria Group **Philip Morris Inter ...
,
Thermo Fisher Scientific Thermo Fisher Scientific Inc. is an American supplier of scientific instrumentation, reagents and consumables, and software services. Based in Waltham, Massachusetts, Thermo Fisher was formed through the merger of Thermo Electron and Fisher Sci ...
established a presence in Lithuania. Lithuanian FEZs (
Free economic zone Free economic zones (FEZ), free economic territories (FETs) or free zones (FZ) are a class of special economic zone (SEZ) designated by the trade and commerce administrations of various countries. The term is used to designate areas in which com ...
) offer developed infrastructure, service support, and tax incentives. A company set up in an FEZ is exempt from corporate taxation for its first six years, as well as a tax on dividends and real estate tax. 7 FEZ operate in Lithuania – Marijampolė Free Economic Zone,
Kaunas Free Economic Zone The Kaunas Free Economic Zone (FEZ) or Kaunas FEZ ( lt, Kauno laisvoji ekonominė zona) is a free economic zone near Kaunas, Lithuania. It is a 534 hectare industrial development area which offers favorable and smaller taxes for production or l ...
, Klaipėda Free Economic Zone, Panevėžys Free Economic Zone, Akmenė Free Economic Zone, Šiauliai Free Economic Zone, Kėdainiai Free Economic Zone. There are nine industrial sites in Lithuania, which can also provide additional advantages by having a well-developed infrastructure, offering consultancy service and tax incentives. Lithuania is ranked third among developed economies by the quantity (16) of
Special Economic Zones A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include increasing trade balance, employment, increas ...
– after USA (256) and Poland (21). Lithuanian municipalities provide special incentives to investors who create jobs or invest in infrastructure. Municipalities may tie designation criteria to additional factors, such as the number of jobs created or environmental benefits. Strategic investors' benefits could include favorable tax incentives for up to ten years. Municipalities may grant special incentives to induce investments in municipal infrastructure, manufacturing, and services. About 40 percent of surveyed investors confirmed that they are carrying out Research and experimental development (R&D) or plan to do it in their Lithuanian branches. In 2018 Lithuania ranked as the second most attractive location for manufacturers in the Manufacturing Risk Index 2018. In 2019, Lithuania was 16th in ''Top 20 European FDI destination countries'' list, created by the Ernst & Young.


Corporations

Lithuania traditionally has strong agricultural, furniture, logistics,
textile Textile is an umbrella term that includes various fiber-based materials, including fibers, yarns, filaments, threads, different fabric types, etc. At first, the word "textiles" only referred to woven fabrics. However, weaving is not the ...
,
biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used by ...
and
laser A laser is a device that emits light through a process of optical amplification based on the stimulated emission of electromagnetic radiation. The word "laser" is an acronym for "light amplification by stimulated emission of radiation". The firs ...
industries. Maxima is a retail chain operating in Lithuania, Latvia, Estonia, Poland and Bulgaria and it is the largest Lithuanian capital company and the largest employer in the Baltic states. Girteka Logistics is Europe's largest transport company. ''Biotechpharma'' is a biopharmaceutical research and development company with a focus on recombinant protein technology development. The BIOK Laboratory is a startup founded by biochemistry scientists which is the biggest producer of Lithuanian natural cosmetic products. UAB SANITEX is the largest wholesale, distribution and logistics company in Lithuania and Latvia, also active in Estonia and Poland. UAB SoliTek Cells – leading producer of solar cells in Northern Europe. One of the leaders of cellular
IoT The Internet of things (IoT) describes physical objects (or groups of such objects) with sensors, processing ability, software and other technologies that connect and exchange data with other devices and systems over the Internet or other comm ...
gateways producers in Europe – UAB Teltonika. In the "Baltic Top 50", the biggest Baltic states companies rating created by Coface, more than half – 29 – companies are from Lithuania.


Largest companies

Largest companies of Lithuania in 2021, by revenue:


Most valuable companies

Largest Lithuanian companies by valuation (EUR € billions) according to
15min 15min () is one of the largest news websites in Lithuania, and is owned by Estonian media company Postimees Group. The website attracts over one million unique users per month and is led by CEO Ramūnas Šaučikovas. 15min was founded in 200 ...
(2022). Additionally, two more
startup companies A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
have been ranked by comparative values in 2022.


Workforce

The number of the population aged 15 years and over is 1.45 million, activity rate was 60 percent in 2017. During the period of 1995–2017 average salary grew more than four times in Lithuania. Despite this, labour costs in Lithuania are among the lowest in the EU. Average monthly net salary in IV quarter 2018 was EUR 800 and increased by 9.5 percent. Unemployment in Lithuania has been volatile. Since the year 2001, the unemployment rate has decreased from almost 20% to less than 4% in 2007 thanks to two main reasons. Firstly, during the time of rapid economic expansion, numerous work places were established. This caused a decrease in the unemployment rate and a rise in staff expenses. Secondly, emigration has also reduced unemployment problems since accession to the EU. However, the economic crisis of year 2008 has lowered the need for workers, so the unemployment rate increased to 13.8% and then stabilized in the third quarter of 2009. Unemployment rate in I quarter of 2018 was 6.3 percent. Lithuania is among the top 5 countries in the world by postsecondary (tertiary) education attainment., 54.9% of the population aged 25 to 34, and 30.7% of the population aged 55 to 64 had completed tertiary education. The share of tertiary-educated 25–64-year-olds in STEM (
Science, technology, engineering, and mathematics Science, technology, engineering, and mathematics (STEM) is an umbrella term used to group together the distinct but related technical disciplines of science, technology, engineering, and mathematics. The term is typically used in the context o ...
) fields in Lithuania were above the OECD average (29% and 26% respectively), similarly to business, administration and law (25% and 23% respectively). The level of labour productivity in Lithuania today is about one-third below the OECD average. Lithuania is ranked 15th in Employment Flexibility Index.


Income and wealth distribution

Lithuania belongs to high income group according to
Credit Suisse Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
Global Wealth Report 2019. As of 2019, Lithuanian average wealth per adult was $50,254 (an increase of 82% from $27,507 in the year 2017) Household debt is among the lowest among EU countries – 49 percent of net disposable income in 2015.


Sectors of economy


Services

One of the most important sub-sectors is information and communication technologies (ICT). Around 37,000 employees work for more than 2,000 ICT companies. ICT received 9.5% of total FDI. Lithuania hosts 13 of the 20 largest IT companies in the Baltic States. Lithuania exported EUR 128 million worth ICT services in II quarter of 2018. Development of shared services and
business process outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...
are some of the most promising fields. Companies that have outsourced their business operations to Lithuania include
Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...
,
Danske Bank Danske Bank A/S is a Danish multinational banking and financial services corporation. Headquartered in Copenhagen, it is the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail customers. ...
, CITCO Group,
Western Union The Western Union Company is an American multinational financial services company, headquartered in Denver, Colorado. Founded in 1851 as the New York and Mississippi Valley Printing Telegraph Company in Rochester, New York, the company chang ...
,
Uber Uber Technologies, Inc. (Uber), based in San Francisco, provides mobility as a service, ride-hailing (allowing users to book a car and driver to transport them in a way similar to a taxi), food delivery (Uber Eats and Postmates), pack ...
, MIRROR, PricewaterhouseCoopers, Anthill,
Adform Adform is a global digital media advertising technology company specializing in real-time programmatic marketing automation technologies. Its operations are headquartered in Europe. The company specialized in the creation of technology that hel ...
,
Booking Holdings Booking Holdings Inc. is an American travel technology company incorporated under Delaware General Corporation Law and based in Norwalk, Connecticut, that owns and operates several travel fare aggregators and travel fare metasearch engines inclu ...
( Kayak.com,
Booking.com Booking.com, headquartered in Amsterdam, is one of the largest online travel agencies. It is a subsidiary of Booking Holdings. History In 1996, Geert-Jan Bruinsma, a student at Universiteit Twente, founded Bookings.nl. In 2000, Booking.com w ...
), HomeToGo,
Visma Visma is a privately held company headquartered in Oslo, Norway, that provides business software and IT related development and consultancy. The company is majority owned by Hg, a private equity firm. The company was formed in 1996 in Norway, t ...
,
Unity Unity may refer to: Buildings * Unity Building, Oregon, Illinois, US; a historic building * Unity Building (Chicago), Illinois, US; a skyscraper * Unity Buildings, Liverpool, UK; two buildings in England * Unity Chapel, Wyoming, Wisconsin, US; ...
,
Yara International Yara International ASA is a Norwegian Chemical industry, chemical company. It produces, distributes, and sells nitrogen-based mineral fertilizers and related industrial products. Its product line also includes phosphate and potash-based mineral f ...
,
Nasdaq Nordic Nasdaq Nordic is the common name for the subsidiaries of Nasdaq, Inc. that provide financial services and operate marketplaces for securities in the Nordic and Baltic regions of Europe. Historically, the operations were known by the compan ...
,
Bentley Systems Bentley Systems, Incorporated is an American-based software development company that develops, manufactures, licenses, sells and supports computer software and services for the design, construction, and operation of infrastructure. The company's ...
, Ernst & Young and many more.


Financial services

The financial sector concentrates mostly on the domestic market. There are thirteen commercial banks that hold a license from the Bank of Lithuania and eight foreign bank branches. Most of the banks belong to international corporations, mainly
Scandinavia Scandinavia; Sámi languages: /. ( ) is a subregion in Northern Europe, with strong historical, cultural, and linguistic ties between its constituent peoples. In English usage, ''Scandinavia'' most commonly refers to Denmark, Norway, and Swed ...
n. The financial sector has demonstrated incredible growth in the pre-crisis period (1998–2008). Bank assets were only €3.2 billion or 25.5% from GDP in 2000, half of which consisted of loan portfolio. By the beginning of the year 2009, bank assets grew to €26.0 billion or 80.8% to GDP, the loan portfolio reached €20.7 billion. The loan-to-GDP ratio was 64%. The growth of deposits was not as fast as that of loans. At the end of 2008, the loan portfolio was almost twice as big as that of deposits. It demonstrated high dependence on external financing. Contraction in the loan portfolio has been recorded over the past year, so the loans to deposits ratio are slowly getting back to healthy levels.
Moody's Corporation Moody's Corporation, often referred to as Moody's, is an American business and financial services company. It is the holding company for Moody's Investors Service (MIS), an American credit rating agency, and Moody's Analytics (MA), an American p ...
declared about opening its office in Vilnius.


=FinTech

= The country has increasingly sought to position itself as the EU's main fintech hub, hoping to attract international firms by promising to provide European operational licences within three months, compared to a waiting period of up to a year in countries like Germany or the UK. In 2017 only, 35
FinTech Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are ...
companies came to Lithuania – a result of Lithuanian government and Bank of Lithuania simplified procedures for obtaining licences for the activities of e-money and payment institutions. Europe's first international Blockchain Centre launched in Vilnius in 2018. The government of Lithuania also aims to attract financial institutions looking for a new location after
Brexit Brexit (; a portmanteau of "British exit") was the withdrawal of the United Kingdom (UK) from the European Union (EU) at 23:00 GMT on 31 January 2020 (00:00 1 February 2020 CET).The UK also left the European Atomic Energy Community (EAEC or ...
. Lithuania has granted a total of 39 e-money licenses, second in the EU only to the U.K. with 128 licenses. In 2018,
Google Google LLC () is an American multinational technology company focusing on search engine technology, online advertising, cloud computing, computer software, quantum computing, e-commerce, artificial intelligence, and consumer electronics. I ...
set up a payment company in Lithuania, Vilnius was ranked a seventh FinTech city by
foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct c ...
(FDI) performance in 2019.
Bank of Lithuania The Bank of Lithuania ( lt, Lietuvos bankas) is the central bank of the Republic of Lithuania. The Bank of Lithuania is a member of the European System of Central Banks. The chairman of the bank is Gediminas Šimkus. Until 2015, the Bank of Li ...
, the Central Bank of Lithuania established a Regulatory sandbox to test financial innovations in a live environment under the guidance and supervision of the Bank of Lithuania. Bank of Lithuania has also developed LBChain which is the world's first blockchain-based sandbox developed by a financial market regulator, combining technological and regulatory infrastructures.


Manufacturing

Lithuania has a much larger manufacturing sector share in the economy's structure than the other Baltic countries. In this regards Lithuania is closer to some Central European countries like the Czech Republic or Germany. Manufacturing constitutes the biggest part of gross value added in Lithuania. The food processing sector constitutes 11% of total exports. Dairy products, especially cheese, are well known in neighbouring countries. Another important manufacturing activity is chemical products. The manufacturing of machinery and equipment sector in Lithuania comprises 7.1% of the country's GDP. 80% of production is exported so chemical products constitute 12.5% of total exports. Year 2019 was exemplary – more than 10 new factories were opened in Lithuania, working in the fields in engineering, high precision instruments, furniture and medical products. ;Furniture Furniture production employs more than 50,000 people and has seen double-digit growth over the last three years. The biggest companies in this field work in cooperation with
IKEA IKEA (; ) is a Dutch multinational conglomerate based in the Netherlands that designs and sells , kitchen appliances, decoration, home accessories, and various other goods and home services. Started in 1943 by Ingvar Kamprad, IKEA has been ...
, which owns one of the biggest wood processing companies in Lithuania. Lithuania is the fourth biggest supplier of furniture for IKEA after Poland, Italy and Germany. ;Automotive industry
Continental AG Continental AG, commonly known as Continental or colloquially as Conti, is a German multinational automotive parts manufacturing company specializing in tires, brake systems, interior electronics, automotive safety, powertrain and chassis compo ...
in 2018 started to build a factory for high precision car electronics – the biggest greenfield investment project in Lithuania so far. Another German manufacturer of lighting technology
Hella ''Hella'' is an American slang term that originated in the San Francisco Bay Area. It is used as an intensifying adverb such as in "hella bad" or "hella good" and was eventually added to the ''Oxford English Dictionary'' in 2002. It is possibl ...
opened a plant in 2018 in Kaunas FEZ, which will produce sensors, actuators and control modules for the automotive industry. Lithuania's automotive cluster experienced significant growth during the past 5 years. Companies in the automotive and engineering sector are relatively small but offer flexible services for small and non-standard orders at competitive prices. The sector employs about 3% of the working population and receives 5.6% of FDI.
Vilnius Gediminas Technical University Vilnius Gediminas Technical University (VILNIUS TECH) is a public university located in Vilnius, Lithuania. There are 10 faculties including Antanas Gustaitis Aviation Institute, Architecture, Business Management, Civil Engineering, Creative I ...
prepares experts for the sector. ;Biotechnology and life sciences Lithuania's life science sector is growing around 20–25% annually; with special focus on the production and research of biotechnology, pharmaceutical and medical devices. ;Laser technology Lithuanian laser companies were among the first ones in the world to transfer fundamental research into manufacturing. Lithuania's laser producers export laser technologies and devices to nearly 100 countries. Half of all
picosecond A picosecond (abbreviated as ps) is a unit of time in the International System of Units (SI) equal to 10−12 or (one trillionth) of a second. That is one trillionth, or one millionth of one millionth of a second, or 0.000 000 000  ...
lasers sold worldwide are produced by Lithuanian companies, while Lithuanian-made
femtosecond A femtosecond is a unit of time in the International System of Units (SI) equal to 10 or of a second; that is, one quadrillionth, or one millionth of one billionth, of a second. For context, a femtosecond is to a second as a second is to about 31. ...
parametric light amplifiers, used in generating the ultrashort laser pulses, account for as much as 80% of the world market.


Tourism

Tourism in Lithuania becoming increasingly important for local economy, constituting around 5.3% of GDP in 2016. Lithuania has 22,000 rivers and rivulets, 3,000 lakes, a well-developed rural tourism network, a unique coastal area of almost 100 km and four
UNESCO The United Nations Educational, Scientific and Cultural Organization is a specialized agency of the United Nations (UN) aimed at promoting world peace and security through international cooperation in education, arts, sciences and culture. It ...
World Heritage Site A World Heritage Site is a landmark or area with legal protection by an international convention administered by the United Nations Educational, Scientific and Cultural Organization (UNESCO). World Heritage Sites are designated by UNESCO for h ...
s. Lithuania receives more than 1.4 million foreign tourists a year. Germany, Poland, Russia, Latvia, and Belarus supply the most tourists, and a significant number arrive from the UK, Finland, and Italy as well.


Agriculture

Despite a decreased share in GDP, the agricultural sector is still important for Lithuania as it employs almost 8% of the work force and supplies materials for the
food processing Food processing is the transformation of agricultural products into food, or of one form of food into other forms. Food processing includes many forms of processing foods, from grinding grain to make raw flour to home cooking to complex indust ...
sector. 44.8% of the land is arable. Total crop area was 1.8 million hectares in 2008. Cereals, wheat, and
triticale Triticale (; × ''Triticosecale'') is a hybrid of wheat (''Triticum'') and rye (''Secale'') first bred in laboratories during the late 19th century in Scotland and Germany. Commercially available triticale is almost always a second-generation h ...
are the most popular production of farms. The number of livestock and poultry has decreased twofold compared to the 1990s. The number of cattle in Lithuania at the beginning of the year 2009 was 770,000, the number of dairy cows was 395,000, and the number of poultry was 9.1 million. Lithuanian food consumption has evolved; between 1992 and 2008, consumption of vegetables increased by 30% to 86 kg per capita, and consumption of meat and its products increased by 23% during the same period to 81 kg per capita. On the other hand, consumption of milk and
dairy product Dairy products or milk products, also known as lacticinia, are food products made from (or containing) milk. The most common dairy animals are cow, water buffalo, nanny goat, and ewe. Dairy products include common grocery store food items in t ...
s has decreased to 268 kg per capita by 21%, and the consumption of bread and grain products decreased to 114 kg per capita by 19% as well. Lithuania produced in 2018: * 2.8 million tons of
wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeological ...
; * 888 thousand tons of
sugar beet A sugar beet is a plant whose root contains a high concentration of sucrose and which is grown commercially for sugar production. In plant breeding, it is known as the Altissima cultivar group of the common beet (''Beta vulgaris''). Together w ...
(the beet is used to manufacture
sugar Sugar is the generic name for sweet-tasting, soluble carbohydrates, many of which are used in food. Simple sugars, also called monosaccharides, include glucose, fructose, and galactose. Compound sugars, also called disaccharides or double s ...
and
ethanol Ethanol (abbr. EtOH; also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound. It is an alcohol with the chemical formula . Its formula can be also written as or (an ethyl group linked to a hyd ...
); * 619 thousand tons of barley; * 433 thousand tons of
rapeseed Rapeseed (''Brassica napus ''subsp.'' napus''), also known as rape, or oilseed rape, is a bright-yellow flowering member of the family Brassicaceae (mustard or cabbage family), cultivated mainly for its oil-rich seed, which naturally contains ...
; * 296 thousand tons of
potato The potato is a starchy food, a tuber of the plant ''Solanum tuberosum'' and is a root vegetable native to the Americas. The plant is a perennial in the nightshade family Solanaceae. Wild potato species can be found from the southern United S ...
; * 213 thousand tons of
pea The pea is most commonly the small spherical seed or the seed-pod of the flowering plant species ''Pisum sativum''. Each pod contains several peas, which can be green or yellow. Botanically, pea pods are fruit, since they contain seeds and d ...
; * 182 thousand tons of
oat The oat (''Avena sativa''), sometimes called the common oat, is a species of cereal grain grown for its seed, which is known by the same name (usually in the plural, unlike other cereals and pseudocereals). While oats are suitable for human con ...
; * 153 thousand tons of
triticale Triticale (; × ''Triticosecale'') is a hybrid of wheat (''Triticum'') and rye (''Secale'') first bred in laboratories during the late 19th century in Scotland and Germany. Commercially available triticale is almost always a second-generation h ...
; * 149 thousand tons of
bean A bean is the seed of several plants in the family Fabaceae, which are used as vegetables for human or animal food. They can be cooked in many different ways, including boiling, frying, and baking, and are used in many traditional dishes thr ...
; In addition to smaller productions of other agricultural products, like apple (92 thousand tons),
maize Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. The ...
(87 thousand tons)and
rye Rye (''Secale cereale'') is a grass grown extensively as a grain, a cover crop and a forage crop. It is a member of the wheat tribe (Triticeae) and is closely related to both wheat (''Triticum'') and barley (genus ''Hordeum''). Rye grain is u ...
(44 thousand tons).


Regional situation

Lithuania is divided into ten counties. There are four cities with a population over 100,000 and four cities of over 30,000 people. The gross regional product is concentrated in the three largest counties –
Vilnius Vilnius ( , ; see also #Etymology and other names, other names) is the capital and List of cities in Lithuania#Cities, largest city of Lithuania, with a population of 592,389 (according to the state register) or 625,107 (according to the munic ...
,
Kaunas Kaunas (; ; also see other names) is the second-largest city in Lithuania after Vilnius and an important centre of Lithuanian economic, academic, and cultural life. Kaunas was the largest city and the centre of a county in the Duchy of Trakai ...
, and
Klaipėda Klaipėda (; ; german: Memel; pl, Kłajpeda; russian: Клайпеда; sgs, Klaipieda) is a city in Lithuania on the Baltic Sea coast. The capital of the Klaipėda County, eponymous county, it is List of cities in Lithuania, the third largest ...
. These three counties account for 70% of the GDP with just 60% of the population. Service centers and industry are concentrated there. In five counties (those of
Alytus Alytus is a city with municipal rights in southern Lithuania. It is the capital of Alytus County. Its population in 2022 was 53,925. Alytus is the historical centre of the Dzūkija region. The city lies on the banks of the Nemunas River. The ma ...
,
Marijampolė Marijampolė (; also known by several other names) is a cultural and industrial city and the capital of the Marijampolė County in the south of Lithuania, bordering Poland and Russian Kaliningrad Oblast, and Lake Vištytis. The population of Ma ...
,
Panevėžys Panevėžys (; Latin: ''Panevezen''; pl, Poniewież; yi, פּאָנעװעזש, ''Ponevezh''; see also other names) is the fifth largest city in Lithuania. As of 2011, it occupied with 113,653 inhabitants. As defined by Eurostat, the population ...
,
Šiauliai Šiauliai (; bat-smg, Šiaulē; german: Schaulen, ) is the fourth largest city in Lithuania, with a population of 107,086. From 1994 to 2010 it was the capital of Šiauliai County. Names Šiauliai is referred to by various names in different la ...
and
Tauragė Tauragė (; see other names) is an industrial city in Lithuania, and the capital of Tauragė County. In 2020, its population was 21,520. Tauragė is situated on the Jūra River, close to the border with the Kaliningrad Oblast, and not far from ...
), GDP per capita is still below 80% of the national average. In order to achieve balanced regional distribution of GDP, nine public
industrial park An industrial park (also known as industrial estate, trading estate) is an area zoned and planned for the purpose of industrial development. An industrial park can be thought of as a more "heavyweight" version of a business park or office park ...
s (Akmene Industrial Park, Alytus Industrial Park, Kedainiai Industrial Park, Marijampolė Industrial Park, Pagegiai Industrial Park, Panevėžys Industrial Park, Radviliskis Industrial Park, Ramygala Industrial Park and Šiauliai Industrial Park) and three private industrial parks (Tauragė Private Industrial Park, Sitkunai Private Industrial Park, Ramučiai Private Logistic and Industrial Park) were established to provide some tax incentives and prepared physical infrastructure.


Infrastructure

The transport, storage, and communication sector has increased its importance to the economy of Lithuania. In 2008, it accounted for 12.1% of GDP compared to 9.1% in 1996.


Communications

Lithuania has a broadly developed radio, television, landline and mobile phone, as well as broadband internet networks.
Lithuanian National Radio and Television Lithuanian National Radio and Television ( Lithuanian: Lietuvos nacionalinis radijas ir televizija) is a non-profit public broadcaster that has been providing regular radio services since 1926 and television broadcasts since 1957. LRT joined Euro ...
, the public broadcaster in Lithuania operates 3 television channels, including a satellite channel, as well as 3 radio stations. Privately owned commercial TV and Radio broadcasters operate a multitude national, regional and local channels. There are four TIER III datacenters in Lithuania. Lithuania is 44th globally ranked country on data center density according to Cloudscene. The fixed landline network connects 625 thousand households and businesses (down from the record 845 thousand in 2005). The decline in subscription and utilization of the landline network has been driven by increased availability of mobile phone services. The mobile telephony penetration rate in Lithuania (of 151 per 100 population in 2013) has been one of the highest in the world. In 2013, there were 13 providers of mobile phone services, with the three largest ones – BITĖ Lietuva, Omnitel, and
Tele2 Tele2 AB is a Swedish telecommunications operator headquartered in the Kista Science City, Stockholm, Sweden. It is a major telephone operator in Sweden, Russia, Estonia, Latvia and Lithuania. Tele2 also has a 25% share in T-Mobile Netherlan ...
– operating their own cellular networks. Lithuanian retail internet sector is competitive, with more than 100 service providers. Retail internet connectivity in Lithuania was among the cheapest in Europe; however, the internet penetration rate (64% of households using internet in 2013) was lower than in other EU countries in the region – Estonia (79%), Latvia (70%) and Poland (69%). Lithuanian internet connection speeds have been claimed to be among the fastest in the world based on user-initiated tests at Speedtest.net.


Energy

The utilities sector accounts for more than 3% of gross value added in Lithuania.
Electricity Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described ...
production exceeded 12 billion kWh in 2007, and consumption exceeded 9.6 billion kWh. Surplus electricity is exported. Lithuania operated a
nuclear power Nuclear power is the use of nuclear reactions to produce electricity. Nuclear power can be obtained from nuclear fission, nuclear decay and nuclear fusion reactions. Presently, the vast majority of electricity from nuclear power is produced ...
plant in
Visaginas Visaginas () is the centre of Lithuania's youngest municipality, located on the north-eastern edge of the country. It was built as a town for workers engaged in the construction of the Ignalina Nuclear Power Plant. Visaginas is the only town in L ...
, which produced 72% of electricity in Lithuania. The plant was shut down on 31 December 2009 in line with the commitments made when Lithuania joined EU in 2004. A new nuclear power plant in Visaginas has been proposed but the status of the project is uncertain after it was rejected by the voters in a referendum in 2012. The supply of heating energy has been modernized during the last decade (1998–2008). Technological loss in the heat energy system has decreased significantly from 26.2% in the year 2000 to 16.7% in 2008. The amount of
air pollution Air pollution is the contamination of air due to the presence of substances in the atmosphere that are harmful to the health of humans and other living beings, or cause damage to the climate or to materials. There are many different type ...
was reduced by one-third. The share of
renewable energy Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...
resources in the total fuel balance for heat production increased to almost 20%. In order to break down
Gazprom PJSC Gazprom ( rus, Газпром, , ɡɐzˈprom) is a Russian majority state-owned multinational energy corporation headquartered in the Lakhta Center in Saint Petersburg. As of 2019, with sales over $120 billion, it was ranked as the large ...
's monopoly in the natural gas market of Lithuania, the first large scale LNG import terminal ( Klaipėda LNG FSRU) in the Baltic region was built in the port of Klaipėda in 2014. The Klaipėda LNG terminal was called ''Independence'', thus emphasising the aim to diversify the energy market of Lithuania. Norvegian company
Equinor Equinor ASA (formerly Statoil and StatoilHydro) is a Norwegian state-owned multinational energy company headquartered in Stavanger. It is primarily a petroleum company, operating in 36 countries with additional investments in renewable energy. I ...
supplies of natural gas annually from 2015 until 2020. The terminal is able to cover 100% of Lithuania's demand and 90% of Latvia's and Estonia's national demand in the future.
Kruonis Pumped Storage Plant Kruonis Pumped Storage Plant (the KPSP) is located near Kruonis, Lithuania, east of Kaunas. Its main purpose is to provide grid energy storage. It operates in conjunction with the Kaunas Hydroelectric Power Plant. During periods of low demand, ...
operates as
pumped-storage Pumped-storage hydroelectricity (PSH), or pumped hydroelectric energy storage (PHES), is a type of hydroelectric energy storage used by electric power systems for load balancing. The method stores energy in the form of gravitational potential ...
providing a spinning reserve of the power system, in order to regulate the load curve of the power system 24 hours a day. In 2015 Kruonis Industrial Park was established as a place for data centers. In 2018 synchronising the Baltic States' electricity grid with the
Synchronous grid of Continental Europe The synchronous grid of Continental Europe (also known as Continental Synchronous Area; formerly known as the UCTE grid) is the largest synchronous electrical grid (by connected power) in the world. It is interconnected as a single phase-locked ...
has started.


Transport

Lithuania forms part of the transport corridor between the East and the West. The volume of goods transported by road transport has increased fivefold since 1996. The total length of roadways is more than 80,000 km, and 90% of them are paved. The government spending on road infrastructure exceeded €0.5 billion in 2008. Via Baltica highway passes through Kaunas, while membership in the
Schengen Agreement The Schengen Agreement ( , ) is a treaty which led to the creation of Europe's Schengen Area, in which internal border checks have largely been abolished. It was signed on 14 June 1985, near the town of Schengen, Luxembourg, by five of the te ...
allows for smooth border crossing to Poland and Latvia. Rail transport in Lithuania provides long-distance passenger and cargo services. Railways carry approximately 50 million tons of cargo and 7 million passengers a year. Direct rail routes link Lithuania with Russia, Belarus, Latvia, Poland, and Germany. Also, the main transit route between Russia and Russia's
Kaliningrad Kaliningrad ( ; rus, Калининград, p=kəlʲɪnʲɪnˈɡrat, links=y), until 1946 known as Königsberg (; rus, Кёнигсберг, Kyonigsberg, ˈkʲɵnʲɪɡzbɛrk; rus, Короле́вец, Korolevets), is the largest city and ...
Region passes through Lithuania. '' Lithuanian Railways'' AB transports about 44% of the freight carried through Lithuania. This is a very high indicator compared to other EU countries, where freight transportation by rail amounts to only 10% of the total. An ice-free seaport of Klaipeda is located in the western part of Lithuania. The port is an important regional transport hub connecting the sea, land and railway routes from east and west. It handles roughly 7,000 ships and 30 million tons of cargo every year, and accepts large-tonnage vessels (dry-cargo vessels up to 70,000 DWT, tankers up to 100,000 DWT and cruise ships up to 270 meters long). The seaport of Klaipėda is able to receive ''
Panamax Panamax and New Panamax (or Neopanamax) are terms for the size limits for ships travelling through the Panama Canal. The limits and requirements are published by the Panama Canal Authority (ACP) in a publication titled "Vessel Requirements". ...
''-type vessels. One of the fastest growing segments of sea transport is passenger traffic, which has increased fourfold since 2002. The inland river cargo port in Marvelė, linking Kaunas and Klaipėda, received first cargo in 2019. Lithuania has four international airports –
Vilnius Airport Vilnius Airport ( lt, Vilniaus oro uostas) is the international airport of Vilnius, the capital of Lithuania. It is located south of the city. It is the largest of the three commercial airports in Lithuania by passenger traffic. With one runway ...
(VNO), Kaunas Airport (KUN), Šiauliai Airport (SQQ) and Palanga Airport (PLQ). More than 30 domestic airports being used by aeroclubs and amateur pilots.


Storage

There are more than 600,000 m2 of modern logistics and
warehousing A warehouse is a building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial parks on the outskirts of cities, town ...
facilities in Lithuania. The biggest supply of new, modern warehousing facilities is in the capital city
Vilnius Vilnius ( , ; see also #Etymology and other names, other names) is the capital and List of cities in Lithuania#Cities, largest city of Lithuania, with a population of 592,389 (according to the state register) or 625,107 (according to the munic ...
(after the completion of several new projects in the third quarter of 2009, the supply of modern warehousing premises has increased by nearly 12% in Vilnius and currently reaches 334,400 m2 of the rentable area). Kaunas is in the second place (around 200,000 m2), and
Klaipėda Klaipėda (; ; german: Memel; pl, Kłajpeda; russian: Клайпеда; sgs, Klaipieda) is a city in Lithuania on the Baltic Sea coast. The capital of the Klaipėda County, eponymous county, it is List of cities in Lithuania, the third largest ...
in the third (122,500 m2). Since the beginning of the year 2009, prices for warehousing premises have dropped by 20–25% in Vilnius, Kaunas, and Klaipėda, and the current level of rents has reached the level of 2003. The costs for renting new warehouses in Vilnius, Kaunas, and Klaipėda are similar and reach 0.75 to 1.42 EUR/m2, while the rents of old warehouses are 0.35 to 0.67 EUR/m2.


International trade

Lithuanian economy is highly open and
International trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant s ...
is crucial. As a result, the ratio of foreign trade to GDP for Lithuania has often exceeded 100%. The EU is the biggest trade partner of Lithuania with a 67% of total imports and 61.3% of total exports during 2015. The Commonwealth of Independent States is the second economic union that Lithuania trades the most with, with a share of imports of 25% and a share of exports of 23.9% during the same period. The vast majority of commodities, including oil, gas, and metals have to be imported, mainly from Russia, however in the recent years Lithuania's energy dependence has shifted towards other countries such as Norway and the US. Mineral products constitute 25% of imports and 18% of exports, mainly driven by the presence of ''
ORLEN Lietuva Orlen Lietuva (former Mažeikių Nafta) is a subsidiary of the Polish PKN Orlen and it owns the Mažeikiai oil refinery as well as the oil-processing plant in Lithuania. It is the only oil refinery in the Baltic States. Refinery The Mažeikiai ...
'' oil refinery with a refining capacity of 9 million tons a year, owned by Polish concern
PKN Orlen Polski Koncern Naftowy Orlen Spółka Akcyjna (PKN Orlen S.A.), commonly known as Orlen, is a Polish oil refiner and petrol retailer. The corporation is a significant European publicly traded firm with major operations in Poland, Czech Republic, ...
. ''Orlen Lietuva'' sold over €3.5 billion worth of products outside Lithuania, compared to the total Lithuanian exports of €24 billion in 2014. Some sectors are directed mainly at export markets. Transport and logistics export ⅔ of their products and/or services; the
biotechnology Biotechnology is the integration of natural sciences and engineering sciences in order to achieve the application of organisms, cells, parts thereof and molecular analogues for products and services. The term ''biotechnology'' was first used by ...
industry exports 80%; plastics export 52%;
laser A laser is a device that emits light through a process of optical amplification based on the stimulated emission of electromagnetic radiation. The word "laser" is an acronym for "light amplification by stimulated emission of radiation". The firs ...
technologies export 86%; metal processing, machinery and electric equipment export 64%; furniture and
wood processing Wood processing is an engineering discipline in the wood industry comprising the production of forest products, such as pulp and paper, construction materials, and tall oil. Paper engineering is a subfield of wood processing. The major wood p ...
export 55%; textile and clothing export 76%; and the food industry exports 36%.


Natural resources

The total value of natural resources in Lithuania is around €17 billion, or around one third of Lithuania's GDP. The most valuable natural resource in the country is subterranean water, which constitutes more than half of the total value of natural resources.


Macro-economic

The following table shows the main economic indicators in 2000–2020.


See also

*
Economy of Europe The economy of Europe comprises about 748 million people in 50 countries. The formation of the European Union (EU) and in 1999 the introduction of a unified currency, the Euro, brought participating European countries closer through the ...
* ''''


References


External links


Lithuania's Department of Statistics

Bank of Lithuania Statistics

Non-profit organization Invest Lithuania

Lithuania’s Economic Outlook for 2017–2020

Main Lithuanian indicators

Lithuania in figures 2017
{{DEFAULTSORT:Economy of Lithuania
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
Lithuania Lithuania (; lt, Lietuva ), officially the Republic of Lithuania ( lt, Lietuvos Respublika, links=no ), is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea. Lithuania ...
Economies of Europe