Swedbank economists have lowered Lithuania’s 2025 economic growth forecast by 0.1 percentage point to 2.5% due to stagnating industrial output but kept next year’s projection unchanged at 3.2%.
The bank said it expects Lithuania’s economy to grow the fastest in the region in 2026, though the expansion could be unbalanced, driven mainly by domestic demand while export growth slows further or halts altogether.
“Next year, household consumption will be supported primarily by fundamental factors: still rapidly rising wages and pensions, record-high employment, and slightly easing inflation,” Swedbank economist Nerijus Mačiulis said in a statement.
“There will also be one-off factors, as some households redirect long-term savings toward short-term needs. However, we expect most people will continue saving for retirement, and most of the funds withdrawn from pension accounts will go into investment rather than consumption.”
Swedbank maintained its 2025 average inflation forecast at 3.8% but cut its 2026 projection by 0.2 percentage point to 3.3%.
The bank expects average wages in Lithuania to rise 8.7% this year and 8% in 2026, noting that productivity growth will continue to lag behind wage increases, making it harder for some companies to compete in export markets.
Swedbank projects exports of goods and services to grow 2% in 2026, while household consumption will increase by nearly 6%. Unemployment is expected to remain at 7.1% this year and next, with employment rising by 0.2% annually.
Globally, Swedbank forecasts US GDP growth of about 2% this year, with more than one-third driven by corporate investments in data centres. The bank expects the US Federal Reserve to cut interest rates three more times, though renewed inflation could hinder stronger economic stimulus.
In the eurozone, both industrial activity and household consumption are showing signs of recovery this year, but faster growth is not expected until 2027. Swedbank forecasts that the European Central Bank will lower its key interest rate once more in March 2026, to 1.75%.
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