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Lithuania Economy
 
 
 

General

Lithuania is a member of the European Union and the biggest economy among three Baltic states. GDP per capita reached $17,800 in 2008 and was higher than the ones of all its neighbours – Latvia, Poland, Russia and Belarus.

GDP per capita in Lithuania is 70% above the world’s average of $10,500. Lithuania has a favourable legislative basis for business as the country is ranked the 3rd in the region of Eastern Europe and Central Asia and the 26th in the world by the 'Ease of Doing Business Index' prepared by the World Bank Group. Lithuania is ranked the 30th out of 179 countries in the 'Index of Economic Freedom', measured by The Heritage Foundation. According to the Human Development Report 2009, Lithuania belongs to the group of high human development countries.
Having moved away from central planning system in the late 1980’s, in 1990, Lithuania was the first to break away from the Soviet Union and become an independent capitalist economy. Lithuania soon implemented liberal reforms and became one of the fastest growing countries in the world last decade as GDP growth rate was positive 9 years in a row till 2009. It enjoyed high growth rates after entering the European Union along with other Baltic states, leading to the notion of a Baltic Tiger. Current excellent telecommunication infrastructure and well-educated, multilingual workforce give the possibility to provide high quality business services and produce manufacturing products worldwide.

In 2005 the GDP grew by 7.5% and the inflation rate was 3%. GDP growth reached its height in 2007, increasing by 8.9%. Lithuania was the last among the Baltic states to be hit by the economic crisis because its GDP growth rate in 2008 was still positive. In the third quarter of 2009, compared to the previous quarter, GDP grew again by 6.1% after 5 quarters with negative numbers. Rebound in Lithuania’s economy in the third quarter was the fastest in the EU. In the last quarter of 2009 Lithuanian economy rose moderately by 0.1%, however the Finance Ministry of Lithuania forecasts that Lithuania’s economy will keep growing by 1.6% in 2010 and by 3.2% in 2011.

High value added production is increasing in Lithuania. Several companies produce pharmaceutical substances, components for molecular diagnostics and other sophisticated biotech products. 80% of the production is exported to more than 70 countries. Lithuanian pharmaceutical companies are expanding to foreign markets by acquiring companies in Slovakia and Poland.

Lithuania has over 50% of the world’s market for high-energy pico-second lasers, and is a leader in global production of ultra-fast parametric light generators. Lithuanian laser companies were among the first ones in the world to transfer fundamental research into manufacture. Lithuania’s laser producers export laser technologies and devices to nearly 100 countries, including EU members, the US, Japan, Israel and Switzerland, mostly for universities and corporate laboratories for scientific research purposes.

Recent global broadband Internet studies show that Lithuania has got the fastest internet in the world, as well as is one of the leading countries in terms of internet service quality. The broadband speed analysis tool that allows anyone to test their internet connection Speedtest.net places Lithuania as No. 1 on the list of the world’s top countries by upload speed. Lithuania is also on the list of the world’s top countries of download speed. Lithuania has one of the highest mobile telephone penetration rates, as well. With a subscription rate of 149 per 100 population, Lithuania is ranked the 8th in the world.

Excellent telecommunication infrastructure and well-educated, multilingual workforce enable to provide high quality business services worldwide. Business services vary from financial to accounting and reporting services. The share of value added in this sector reaches 13%.

The service sector accounts for the largest share of GDP. One of the most important sub-sectors is information and communication technologies. 37 thousand employees work for more than 2000 ICT companies. ICT received 9.5% of total FDI. 11 out of 20 biggest IT companies from Baltic countries are based in Lithuania. Lithuania exported 31% of its IT services in the first quarter of 2009.

Development of shared services and outsourcing of business processes (BPO) is one of the most promising fields in Lithuania. The research company Datamonitor forecasts a 60% personnel growth by 2009. International companies successfully outsourcing business operations in Lithuania are Barclays Bank PLC, CITCO Group, MIRROR, PricewaterhouseCoopers, Anthill, Ernst&Young and etc.


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