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Lithuania – Important Facts

Lithuania is a country in Northern Europe. It is Situated on the southeastern shore of the Baltic Sea, it shares a border with Latvia, Belarus, Poland, and the Russian enclave of Kaliningrad. Across the Baltic Sea lies Sweden and Denmark. The government system in Lithuania is a parliamentary democracy; the chief of state is the president and the head of government is the prime minister. Lithuania has transitioned from a command economy to a market economy in which the private sector accounts for the majority of GDP and government regulation is transparent and efficient. Lithuania is a member of the European Union (EU).

The economy of Lithuania was one of the fastest growing in the world during the decade until 2008. Between 2000 and 2008, the Lithuanian GDP grew by 77%. One of the most important factors contributing to Lithuania’s economic growth was its accession to the WTO in 2001 and the EU in 2004, which allows free movement of labour, capital, and trade among EU member states. On the other hand, rapid growth caused some imbalances in inflation and balance of payments. The current account deficit to GDP ratio in 2006–2008 was in the double digits and reached its peak in the first quarter of 2008 at a threatening 18.8%. This was mostly due to rapid loan portfolio growth as Scandinavian banks provided cheap credit in Lithuania. The loans directly related to acquisition and development of real estate constituted around half of outstanding bank loans to the private sector. Consumption was affected by credit expansion as well. This led to high inflation of goods and services, as well as trade deficit.

Lithuania was the last among the Baltic states to be hit by recession because its GDP growth rate in 2008 was still positive, followed by a slump of more than 15% in 2009. In the third quarter of 2009, compared to the previous quarter, GDP again grew by 6.1% after five-quarters with negative numbers. A heavy shock to consumers helped to balance the current account in 2009. Net external assets of the Bank of Lithuania are at a record height of €5.5 billion. Economic sentiment and confidence of all business activities have rebounded from a record low at the beginning of the year 2009.

Important Details

  • Country ISO3 : LTU
  • Country Code : 440
  • Income Group : High Income
  • Lending Category : P2P
  • Region : Europe and Central Asia
  • Currency Unit: Euro (EUR)
  • WTO Member : Yes
  • Trade organisations : WTO, EU
  • world rank : 13
  • Regional Ranking : 6th in Europe