Next year, the economy is expected to expand even more amid a higher demand for Lithuanian goods and services in export markers, rising private consumption and recovering investment, according to Gediminas Šimkus, board chairman of the Bank of Lithuania.
"Last year, Lithuania’s economy was still sluggish, but in the first three quarters of this year, the Lithuanian economic pie went 2.1% bigger in size than a year ago," Šimkus told reporters on Thursday.
He said the growth was driven by higher-value production in the engineering and chemical industries, the construction sector’s activity boosted by public tenders and EU funding, and recovering household consumption.
Lithuania’s gross domestic product (GDP) is expected to rise by 2.4% this year, 3.1% in 2025 and in 2026, and by 3% in 2027, according to the central bank’s projection.
The central bank expects Lithuania’s exports to grow by 2.2% this year, by 2.5% in 2025, 3.6% in 2026 and by 3.7% in 2027.
Real private consumption, which fell by 0.3% last year, is projected to rise by 3% in 2024 and by 3.7% per year in the 2025-2027 period.
The Bank of Lithuania forecasts that average wages will grow by 10.3% this year, by 8.7% in 2025 and by 8.1% and 7.5% respectively in 2026 and 2027.
The unemployment rate is forecast to be at 7.4% this year, before starting to fall to 7.1% in 2025, 6.9% in 2026 and 6.7% in 2027.
Šimkus pointed out that although domestic demand has recovered, private consumption is rising slower than wages. Despite that, he said, the real wage bill this year is larger by a third than in 2019, which means that consumption could grow even faster.
"We have observed that the population has not yet recovered from the price shock and remains cautious. Incomes have increased, but most people are still hesitant to spend more. In other words, austerity is still there," he said.
Wages will continue to rise next year but at a slower pace due to lower labour market pressures, according to the Bank of Lithuania. Šimkus also said that rising wages will add to price pressures, particularly in the services sector.