This year Lithuania's economy is set to grow by 2.9% and personal income to increase by almost twice as fast as inflation
After relatively strong economic growth last year, the national economy is expected to grow at a similar rate of 2.9% in 2026. Inflation will rise to 5.0 % this year. The unemployment rate is set to fall to 6.8% this year, while wage growth is set to accelerate significantly to 9.4%. This is foreseen in the updated Economic Development Scenario of the Ministry of Finance.
“Lithuania's economy remains resilient and its growth this year is supported by a strong domestic demand. However, we need to closely monitor the geopolitical and economic situation, as higher energy prices, uncertainty in global trade and weaker external demand remain important risk factors. At the same time, it is important that despite faster inflation, earnings and old-age pensions will grow almost twice as fast this year, thus the purchasing power of the population will increase”, Minister of Finance T. Valys said.
The Economic Development Scenario prepared by the Ministry of Finance projects that, after relatively strong growth last year, in 2026 Lithuania's GDP growth will maintain a similar pace and reach 2.9%, while the effect of the pension Pillar II reform will stimulate domestic consumption. After this effect wears off, GDP growth will slow down to 2.2% in 2027. In the medium term, Lithuania's GDP is expected to grow on average by 2.5% per year.
With the shortage of suitably skilled workers remaining, the unemployment rate will fall to 6.8% in 2026 but will remain relatively high. As economic growth slows down in 2027, the unemployment rate will rise slightly to 6.9% and is set to reach 6.8% in the outer years of the medium term. The number of persons employed will increase by 0.3% this year. In the outer years of the medium term, the change in the number of persons employed in the country will moderately decrease and will be close to –0.1 %.
The scenario projects that average gross monthly wage growth will accelerate to 9.4% this year. Wage growth will mainly be driven by tensions in the labour market, shortage of workers and the impact of the increase in the minimum monthly wage (MMW). In 2027, the growth rate of the average gross monthly wage is expected to slow down to 7.2%.
Price growth, which accelerated last year, will remain strong this year – in 2026 the average annual inflation rate is set to be 5.0%. During this period, it will be significantly increased by the rise in energy commodity prices as a result of the events in the Middle East. On the other hand, so far, the significant increase in energy prices has not been passed on to an important group – food products, for which a decrease was observed in July. The rate of inflation is set to slow down to 3.3% next year and decrease moderately in the medium term.
As income of households grows, the purchasing power of the population will continue to strengthen. Household consumption expenditure is expected to grow by 4.5% this year. The impetus for the growth of consumption comes from the effect of the pension Pillar II reform. After this effect wears off, consumption expenditure growth will slow down to 2.2% in 2027 and reach 2.7% at the end of the medium term.
Expenditure on gross fixed capital formation (GFCF) is expected to grow by 4.6% this year. The growing need to invest in national security, growing external and domestic demand, and the continued need to invest in measures that increase labour productivity, in the outer years of the medium term an average growth rate of expenditure on GFCF could be close to 4.5%.
The scenario foresees that real exports of goods and services are expected to grow by 4.1% in 2026, i.e. slower than last year. Deteriorated international trade conditions due to US import duties on EU goods and higher energy prices due to the war in Iran will have a negative impact on the development of export markets and the development of Lithuanian exports of goods. Exports of services will continue to make a significant contribution to overall export growth. In the outer years of the medium term, exports of goods and services are expected to continue to grow at an annual growth rate of 3.2%, supported by more favourable developments in external demand.
The scenario was drawn up against the background of elevated external environmental instability and economic uncertainty, continued geopolitical conflicts and amid uncertainty about international trade policy.
Russia’s war against Ukraine and intensification of military actions in the Middle East, negative consequences of rising protectionism on international trade, energy and other raw material, food price shocks, less favourable developments in the euro area and global economy, fluctuations in global financial markets, aging society and shortage of workers are part of the negative risk factors that may affect the estimates of key indicators in this scenario.
There are also positive risks, such as stronger domestic and foreign demand, growth-enhancing fiscal policy at EU and national level, accelerated implementation of EU-funded projects, more favourable demographic trends and immigration of skilled workers, a faster green energy transition, the fulfilment of which could lead to a more favourable economic development.
Comparison of key indicators of the Economic Development Scenario
| Title of the indicator | 2025 | 2026 | 2027 | 2028 | 2029 |
| GDP (at current prices), EUR million | 84,258 | 91,421 | 96,533 | 102,119 | 107,635 |
| GDP (at constant prices) evolution, % | 2.9 (2.9) | 2.9 (3.1) | 2.2 (2.3) | 2.6 (2.8) | 2.5 (2.6) |
| Harmonised consumer price index (average annual) evolution, % | 3.4 (3.4) | 5.0 (3.7) | 3.3 (3.4) | 2.8 (2.4) | 2.4 (2.4) |
| Investment (at constant prices) evolution, % | 8.0 (7.3) | 4.6 (5.7) | 4.8 (4.5) | 4.4 (4.4) | 4.4 (4.4) |
| Evolution of exports of goods and services (at constant prices), % | 5.3 (4.2) | 4.1 (2.7) | 3.2 (3.6) | 3.2 (3.6) | 3.2 (3.6) |
| Unemployment rate (acc. to the definition of the Population Employment Survey), % | 6.9 (6.9) | 6.8 (6.8) | 6.9 (6.9) | 6.8 (6.8) | 6.8 (6.8) |
| Average gross monthly wage evolution, % | 8.5 (8.4) | 9.4 (9.7) | 7.2 (6.1) | 6.5 (5.7) | 6.0 (5.7) |
| Evolution of the number of persons employed, % | –0.1 (–0.1) | 0.3 (0.1) | –0.2 (–0.1) | –0.1 (–0.1) | –0.1 (–0.1) |
Sources: Ministry of Finance, State Data Agency.
An estimate for a relevant indicator of the Economic Development Scenario of March 2026 is presented in brackets
The full Lithuania's Economic Development Scenario (September 2026) can be found here.
Additional information:
The Economic Development Scenario has been prepared taking into account the national accounts and other statistics for the first half of 2026, changes in the external environment following the scenario published by the Ministry of Finance in March 2026 and other information. The scenario assumptions for the external environment and exchange rate are in line with the Economic Outlook and assumptions published by the International Monetary Fund in July this year and by the European Central Bank in June 2026, while the assumptions about energy prices (oil and natural gas) are based on information on futures prices.
Last updated: 15-09-2026
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