Lithuania has open and mixed economy that is classified as high-income economy by the World Bank. According to data from 2016, the three largest sectors in Lithuanian economy are – services (68.3% of GDP), industry (28.5%) and agriculture (3.3%). World Economic Forum’s Global Competitiveness Report ranks Lithuania 41st (of 137 ranked countries).
Lithuania joined NATO in 2004, EU in 2004, Schengen in 2007 and OECD in 2018.
On 1 January 2015, euro became the national currency replacing litas at the rate of EUR 1.00 = LTL 3.45280.
Agricultural products and food made 18.3%, chemical products and plastics – 17.8%, machinery and appliances – 15.8%, mineral products – 14.7%, wood and furniture – 12.5% of exports. According to data from 2016, more than half of all Lithuanian exports go to 7 countries including Russia (14%), Latvia (9,9%), Poland (9,1%), Germany (7,7%), Estonia (5,3%), Sweden (4,8%) and United Kingdom (4,3%). Exports equaled 81.31 percent of Lithuania’s GDP in 2017.
Lithuanian GDP experienced very high real growth rates for decade up to 2009, peaking at 11.1% in 2007. As a result, the country was often termed as a Baltic Tiger. However, in 2009 due to a global financial crisis marked experienced a drastic decline – GDP contracted by 14.9% and unemployment rate reached 17.8% in 2010. After the decline of 2009, Lithuanian annual economic growth has been much slower compared to pre-2009 years. According to IMF, financial conditions are conducive to growth and financial soundness indicators remain strong. The public debt ratio in 2016 fell to 40 percent of GDP, to compare with 42.7 in 2015 (before global finance crisis – 15 percent of GDP in 2008).
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.
In the period between 2004 and 2016, one out of five Lithuanians left the country, mostly because of insufficient income situation or seeking the new experience and studies abroad. Long term emigration and economy growth has resulted in noticeable shortages on the labour market and growth in salaries being larger than growth in labour efficiency. Unemployment rate in 2017 was 8.1%.
As of 2019, Lithuanian mean wealth per adult is $50,254, while total national wealth is $115 billion. As of 2020, the average monthly net salary in Lithuania was around €1,000 or $2,200 adjusted for purchasing power parity. Although, cost of living in the country also is sufficiently less with the price level for household final consumption expenditure (HFCE) – 63, being 39% lower than EU average – 102 in 2016.
Lithuania has a flat tax rate rather than a progressive scheme. According to Eurostat, the personal income tax (15%) and corporate tax (15%) rates in Lithuania are among the lowest in the EU. The country has the lowest implicit rate of tax on capital (9.8%) in the EU. Corporate tax rate in Lithuania is 15% and 5% for small businesses. 7 Free Economic Zones are operating in Lithuania.
Information technology production is growing in the country, reaching 1.9 billion euros in 2016. In 2017 only, 35 FinTech 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. 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 set up a payment company in Lithuania.