The Bank of Lithuania vows that the national economy has withstood the shocks of recent years and, after two years of stagnation, has bounced back to growth. In 2025, economic development is expected to be positively influenced by the international financial environment, higher demand for Lithuanian goods and services in export markets, growing private consumption, and recovering investments.
In fact, the forecasts see last year’s GDP increasing by 2.4% In 2025 and 2026, it is expected to grow by 3.1% each year and by 3% in 2027. Economic growth will be held back from growing even faster only by poor opportunities for more efficient use of labor resources, a deteriorating demographic situation, and less growth in trading partner markets than in the previous decade.
Recently, growth in Lithuania has been observed in many economic activities but what stands out is the added value created by business-oriented services. More growth is seen in information and communication, professional, scientific, administrative, customer, and other related services, accounting for about 40% of overall economic growth within the three quarters.
As domestic demand recovers, so do household-oriented services, including trade, arts, entertainment, recreation and other activities. After decreasing by 0.3% in 2023, real private consumption is projected to grow by 3% last year and by 3.7% per year between 2025 and 2027.
The manufacturing sector has also strengthened this year. With the economic situation of Lithuania’s export partners improving, output has grown in many major manufacturing industries. However, businesses do not fully use their production potential, with the level of production capacity utilization still lower than before the onset of the shocks of the last few years and lower than the long-term average.
This year, Lithuania’s exports are expected to increase by 2.5% (from 2.2%), and by 3.6% and 3.7% in 2026 and 2027 respectively. With EU support funds increasing, the impact of the previously tightened monetary policy fading away, and internal and external demand going up, the volume of investments is now set to increase by 6.1%, by 4.8% in 2026, and by 4.4% in 2027. A positive impact on investments is also likely to result from past increases in corporate profits.
The unemployment rate should drop to 7.1%, 6.9% in 2026 and 6.7% in 2027. At the same time, with continued positive net international migration and uncertainties about the prospects for international economic development, pressure on wages is less pronounced. This is particularly evident in the private sector where the wage growth has been slowing down for several years in a row. Average wages are projected to increase by 10.3% in 2024. In 2025, their growth will slow down to 8.7%, 8.1% in 2026, and 7.5% in 2027.
Price pressures get more prominent when labor costs grow more than the total nominal value added, and the competitiveness of less advanced businesses deteriorate. Because of that, the average annual inflation is projected to reach 2.3% in 2025 and 2.6% in both 2026 and 2027. In the best-case scenario.