Your partner for success

Lithuania
Chamber of Commerce Country Factsheet Last update: 18.10.2017

Your advisors at the Chamber of Commerce

  • Steven Koener
    +352423939379
  • Diana Rutledge
    +352423939335
Contact us: europe@cc.lu

Key Indicators

Area
65,300 km2
Population
3,505,738
Government type
parliamentary democracy
Languages
Lithuanian (official) 82%, Russian 8%, Polish 5.6%, other and unspecified 4.4% (2001 census)
GDP
$82.36 billion (2015 est.)
Growth rate
1.6% (2015 est.)
HDI
37
Capital
Vilnius

 

Introduction

Lithuanian lands were united under MINDAUGAS in 1236; over the next century, through alliances and conquest, Lithuania extended its territory to include most of present-day Belarus and Ukraine. By the end of the 14th century Lithuania was the largest state in Europe. An alliance with Poland in 1386 led the two countries into a union through the person of a common ruler. In 1569, Lithuania and Poland formally united into a single dual state, the Polish-Lithuanian Commonwealth. This entity survived until 1795 when its remnants were partitioned by surrounding countries. Lithuania regained its independence following World War I but was annexed by the USSR in 1940 - an action never recognized by the US and many other countries. On 11 March 1990, Lithuania became the first of the Soviet republics to declare its independence, but Moscow did not recognize this proclamation until September of 1991 (following the abortive coup in Moscow). The last Russian troops withdrew in 1993. Lithuania subsequently restructured its economy for integration into Western European institutions; it joined both NATO and the EU in the spring of 2004. In January 2014, Lithuania assumed a nonpermanent seat on the UN Security Council for the 2014-15 term; in January 2015, Lithuania joined the euro zone.

Source: The CIA World Factbook - Lithuania

 

Macroeconomic indicators

Member of the EU since 2004 and the euro-zone since 2015, Lithuania recently realized constant wage and consumption growth and hence rising inflation, reaching 3.4% in April 2017. Rising energy prices also partly influenced the rise in inflation, besides dragging GDP percentage growth. However, GDP growth still rose to 2.3 % in 2016 and is projected to rise to 2.9% in 2017. Being particularly strong in service markets and benefitting from the recent rise in demand from its main trading partners Russia and EU, overall GDP contribution of service markets counted for 66.3% of the overall GDP in 2016, while agriculture is estimated to only contribute 3.3% and industry the remaining 30.4%.

While public debt has been an issue in Lithuania ever since the financial crisis, rising from 14.5% of GDP in 2007 to 41% of GDP in 2014, it has now been haltered at 40% of GDP. With governmental policies and efforts aiming to improve tax administration to better fiscal balance and adapt fiscal rules to be less strict, it is safe to assume falling governmental debt in the next years, projected to fall to 30% by 2022. Also, credit developments and credit unions are moving in the right direction and benefit corporations and households and are being rightly monitored by the authorities after receiving external help by the European Central Bank. When it comes to the labor market, older workers have recently in large numbers postponed retirement due to high wages compared to relatively low pension payments. Policy changes are to be addressed in this sector too, but falling unemployment rates from 18% of labor force in 2010 to 8% in 2016 and projections to further decline to 7.2% in 2018 show a clear improvement.

Going forward, a pickup in total factor productivity growth is necessary. Even though productivity levels have on average risen by 5% ever since 1995, it is still one third behind OECD levels. In the medium term, Lithuanian government has to prevent activities to shift into non-tradable sectors where growth opportunities are limited and prevent further economic growth and public debt decline. Business environment also has to be improved, to offer better labor relations. Educational system needs to be addressed to, since some firms lack skilled workers and the system is partly to blame for the trailing productivity. Next, Lithuania needs to prepare its economy for the announced declining EU funds while fighting political instability over the switch of power from government to parliament and prevent Euro-skepticism to rise further, since Lithuania is reliant on EU funds and the related monetary stability.

IMF Statistics:

Subject descriptor20142015201620172018
Gross domestic product, constant prices
Percent change
3.0321.6172.5892.9773.300
Gross domestic product, current prices
U.S. dollars (Billions)
48.46841.19342.77644.93747.655
Gross domestic product per capita, current prices
U.S. dollars (Units)
16,528.55514,180.14714,899.37215,837.52816,994.221
Inflation, average consumer prices
Percent change
0.242-0.6770.4591.1512.214
Volume of imports of goods and services
Percent change
2.8996.0064.4614.1384.688
Volume of exports of goods and services
Percent change
3.045-0.1513.0263.1034.213
Unemployment rate
Percent of total labor force
10.6959.1187.8187.6187.418
Current account balance
U.S. dollars (Billions)
1.734-0.710-0.676-1.274-1.411
Current account balance
Percent of GDP
3.577-1.724-1.580-2.835-2.961
Colored cells are estimates

Source: IMF Statistics - Lithuania

 

Luxembourg and the country

Existing conventions and agreements

Non double taxation agreement

In order to promote international economic and financial relations in the interest of the Grand Duchy of Luxembourg, the Luxembourg government negotiates bilateral agreements for the avoidance of double taxation and prevent fiscal evasion with respect to Taxes on Income and on fortune with third countries.

  • Convention and Protocol from 22.11.2004 (Memorial 2006, A,no.65, pp. 1300)
  • Effective as of 04.14.2006 (Memorial 2006, A, no. 104, p. 1907)

Air Services agreement

None

Source: http://www.mae.lu/en/Site-MAE/Trade-and-Business/Treaties-Agreements

 

Further information

Foreign Trade

The Statec Foreign Trade statistics provide information on the trade of goods - by product and by country. This information is collected respectively through the INTRASTAT declaration and on the basis of customs documents.

You can see the statistics on the website of the Statec.

Contact points in Lithuania

Embassy of the Grand Duchy of Luxembourg in Lithuania

Ambassador with residence in Warsaw: 

Mr. Conrad BRUCH
ul. Sloneczna 15
00-789 Warsaw
Poland

Tel.: +48 22 507 86 50
Fax: +48 22 507 86 61
E-mail: varsovie.amb(at)mae.etat.lu  

Annuler les modificationsEconomic and Commercial Attaché (AWEX): 

André VILLERS 

Alberta iela 13 (5 th floor)
LV - 1010 RIGA-Latvia

Tel: +371 6 703 93 21
Fax: +371 6 703 93 24
E-mail: riga(at)awex-wallonia.com 

Country risk as defined by Office du Ducroire for Lithuania

Ducroire is the only credit insurer covering open account deals in over 200 countries. A rating on a scale from 1 to 7 shows the intensity of the political risk. Category 1 comprises countries with the lowest political risk and category 7 countries with the highest. Macroeconomics experts also assess the repayment climate for all buyers in a country.

Link: http://www.ducroire.lu/en/node/41?country=129

Useful links