Lithuania overview

Cityscape

In Lithuania we focus on:

Supporting investments in renewable energy and energy efficiency. The EBRD continues to focus on promoting and financing new renewable energy generation and improving energy efficiency particularly in municipal and industrial sectors.

Improving the competitiveness of the export sector. The EBRD is promoting cross-border investments by Lithuanian companies elsewhere in our region and supports export-oriented enterprises with a focus on investments in advanced technologies. Investments in regional equity or mezzanine funds are also being considered.

Support strengthening of local banks. The EBRD is supporting the local banking sector, focussing on strengthening sector stability and promoting consolidation.

Policy dialogue. We are conducting policy dialogue with the Lithuanian authorities to support improvements in corporate governance in the financial and public sectors.

As well as being a country where the EBRD works, Lithuania is also an EBRD donor. Lithuania remains a supporter of the Eastern Europe Energy Efficiency and Environment Partnership Fund, having paid €105,000 for activities in Armenia, Georgia and Moldova.

The EBRD’s latest strategy for Lithuania was adopted on 10 February 2016.

EBRD forecast for Lithuania’s real GDP growth in 2018 3.4%

EBRD forecast for Lithuania’s real GDP growth in 2019 2.8%

Real GDP growth in Lithuania slowed down to 3.8 per cent year-on-year in the first half of 2018. Robust private consumption has been accompanied by an 8 per cent expansion in investment, which is expected to improve further, in line with the accelerated absorption of EU funds and a greater need for capacity expansion among manufacturers. Exports also showed a robust recovery, although their positive effect on GDP has been largely offset by an investment-led strong rise in imports. Rapid wage growth and a further tightening of the labour market will continue supporting robust private consumption.

GDP growth is forecast to decelerate to 3.4 per cent in 2018, before it reaches 2.8 per cent in 2019. The expected weakening in external demand from Lithuania’s major trading partners, amid an investment-led surge in imports, will result in a negative trade balance, and thus will weigh on GDP growth in the forecast horizon. The shrinking working-age population is expected to hurt businesses increasingly, which in turn may defer investment decisions, as the lack of skilled labour may not be easily replaced by machines.

In contrast, the accelerated utilisation of EU funds will likely propel a rise in public investment. Strong wage expansion will have a diminishing effect on consumption, as a result of the savings’ rate recovery after a slump of the latter from the already low level in 2016.

Lithuania in the EBRD’s 2018-19 Transition Report

Lithuania in the latest beeps survey