Lithuania has successfully converged towards OECD living standards over the past 30 years.
Inflation has declined, public debt is low, and growth is gaining momentum.
GDP growth is expected to reach 3.1% in 2025.
With a population that is both shrinking and ageing, Lithuania faces a major demographic shock.
By 2050, the working-age population will decline by 30%. This is likely to exacerbate already existing labour shortages.
To address labour shortages:
- Train older workers and help them find work
- Encourage Lithuanians living abroad to return
- Attract highly skilled immigrants, as well as workers for ageing-related sectors
The old-age dependency ratio is expected to exceed 50% by 2050 and ageing-related costs will increase significantly.
To create fiscal space for ageing related expenses:
- Boost public spending efficiency
- Broaden the tax base
- Encourage formal economic activity
- Promote healthier lifestyles
Lithuania’s productivity levels are catching up to those of Western Europe, but there are ways to further encourage productivity growth.
To boost productivity:
- Strengthen competition in retail energy markets
- Deepen domestic capital markets
- Continue improving the public integrity framework
- Increase spending on research and development
- Improve digital skills
Ensuring funding for renewable energy projects and cutting transport emissions are key to meeting climate goals and strengthening energy security.
To meet climate goals:
- Ensure financing for renewable energy projects through long-term project pipelines and derisking schemes for private investors
- Raise fuel prices while supporting low-income households
- Expand and electrify the rail network
- Improve road-rail connections
- Limit urban sprawl
To learn more, read our Economic Survey of Lithuania 2025.