The economic outlook for 2021 is expected to grow after the recession induced by the Covid-19 pandemic over the past year. Lithuania rebounds quickly with a nationwide blockade for six weeks, with a stop to all stores, non-essential services, and public life: these measures contributed to the containment of the number of cases from Covid-19. A second wave that began last fall turned out to be much stronger and led to another blockage (at the end of October), although with less restrictive measures (for example, stores remained open most of the time). While the restrictive measures in Lithuania were similar to other European countries (e.g. Germany), the economic damage was significantly less. In the first half of 2020, GDP fell by only 1.2% compared to the same period in 2019, the second-best result in the EU after Ireland: strong production in the food and pharmaceutical industries helped stabilize economic growth. After a dynamic economic recovery last summer and another setback in activity at the end of 2020, according to Coface growth this year should be positive, but dampened (+2.2%): it will depend above all on the development of the pandemic and the introduction of a vaccine, as well as on the economic results of major export destinations such as Russia, Poland, and Latvia (together they represent 31% of total exports). Private consumption is expected to remain a major driver of economic growth, as the unemployment rate will slowly fall from 2020 highs.

The current account surplus reached a record level in 2020. The deficit in trade in structural goods has decreased considerably, as imports have fallen more than in export, while the balance of services has remained in surplus and the structural deficit in the balance of capital income has decreased. In 2021, the trade deficit is expected to increase again, with a stronger recovery in domestic demand, with analysts predicting the current account surplus at +4.1%. As far as investment opportunities are concerned, extremely promising sectors are those related to infrastructure development (see rail corridor Rail Baltica) and logistics (the port of Klaipeda is an important sorting center throughout the region), as well as that of some specific industries (wood, plastic, packaging) as well as in some hi-tech areas (information technology, semiconductors, lasers, artificial intelligence), renewable energy and biotechnology. It is worth remembering that Lithuania boasts one of the fastest public Wi-Fi networks in the world, the spread of fiber optics among the local population, and one of the cheapest and most reliable broadband services in the entire EU. The potential for innovation is especially concentrated in Five Valleys. The main investor in research and innovation is the State with 1.04 % of GDP.

Support for growth will also come from fiscal stimulus introduced in 2020 and particularly focused on investment. In 2020, the government decided on an additional budget of €3.5 billion (7% of GDP) to support the healthcare sector and provide wage subsidies to employees. In addition, guarantee schemes (€1.3 billion, 2.6% of GDP) have been expanded and a business support fund (€1 billion, 2.1% of GDP) has been introduced. In addition, an investment plan worth 6.3 billion euros (13% of GDP) for infrastructure and digitalization was approved. Further support should come from the ECB, which is expected to extend its business purchase programs until the end of 2021, along with an extension of targeted long-term refinancing operations (T-LTRO).

However, stimulus programs come at a price: after four consecutive years of surpluses, the government budget went into a big deficit last year and additional investment measures will lead to another large deficit in 2021. Therefore, public debt will increase to almost 50% of GDP, a record in Lithuanian history.