The trade tariff conflict is another shock to the global economy, and the IMF has revised down its growth projections for the global economy and international trade. It recommends addressing emerging tensions to ensure a stable and predictable international trade environment, achieve fiscal sustainability, and implement structural reforms that could boost productivity, diversification, and restore economic growth potential.

The consequences will stifle the growth of the European economy, which also puts Lithuania at risk. Although Lithuania is a small open economy susceptible to changes in international trade, the business has been able to withstand the recent shocks due to the successful diversification of export markets.

Despite the new trade restrictions, the IMF foresees a slightly faster growth of the Lithuanian economy in 2025: the country’s GDP is expected to rise by 2.8%. Next year, however, growth will be slightly slower at 2.5%. The IMF has also revised its price growth projections: inflation is expected to accelerate to 3.5% and reach 2.8% next year. In 2025-26, the unemployment rate should decrease from 6.6% to 6.1%.

The already weak economic growth in the euro area will further slightly decelerate, mainly due to heightened uncertainty and tariffs imposed by trading partners on euro area exports, but this negative impact will be slightly offset by the increase in defence spending. This year, the euro area GDP is expected to grow by 0.8% and by 1.2% next year. Inflation should return to the ECB’s target rate: it will slow down to 2.1% this year and to 1.9% in 2026.

At the end of 2024, household and corporate loans in Lithuania recorded the biggest growth over the year, while resident deposits rose at a much faster pace than in the previous year. In March 2025, interest rates on new business continued to fall while the loan portfolio kept growing.