Lithuania’s economy grew 2.7% in 2025 and economists say the year stood out positively by many measures, driven mainly by industry, transport and retail trade, though signs of fatigue emerged in manufacturing in the second half of the year.
“Almost all sectors saw rapid growth, especially in the final quarter of last year,” Swedbank economist Nerijus Mačiulis said at a news conference Friday. “Growth probably exceeded many forecasts and was among the fastest in the European Union.”
Mačiulis said Lithuania’s economy has outperformed those of Latvia and Estonia over the past five years, a trend that continued in 2025 and is likely to persist this year.
Still, he warned that several sectors are facing serious challenges.
“The catering sector is seeing a rise in bankruptcies and no growth in turnover yet. Some agricultural companies are also under pressure due to low agricultural product prices,” Mačiulis said. “And probably the largest and most vulnerable sector is industry, where there has been almost no growth over the past six months.”
According to Mačiulis, the slowdown of industrial growth is partly linked to higher US import tariffs, intensifying competition within and outside the EU, and weakening export dynamics.
Artea Bank economist Indrė Genytė-Pikčienė said Lithuania started 2025 strongly, but economic momentum slowed in the second half as manufacturing growth stalled from July.
“In the third quarter, we even saw episodes when industrial output volumes were lower than in the same months of 2024,” she told BNS. “Geopolitical tensions, sluggish EU industrial development, structural problems and shifts in US tariff policy increased uncertainty and dampened market appetite for our exports.”
SEB Bank economist Tadas Povilauskas said growth last year was supported by a wide range of sectors, with industry, transport and retail trade playing the biggest role, especially in the fourth quarter.
“All sectors contributed positively to economic growth. Last year we had fairly broad-based expansion,” Povilauskas told BNS.
He said temporary industrial weakness in the third quarter and Belarus’ decision to detain Lithuanian trucks after a brief border closure did not significantly affect overall economic performance. Consumer spending remained strong, he added.
“There were concerns about how transport would be affected, but the clear answer is that it wasn’t,” Povilauskas said. “The sector grew and contributed positively to fourth-quarter growth. And it’s hard to find a retailer who complained about Christmas sales.”
He also pointed to “quite strong” growth in the information technology sector and said the economy proved more stable than expected.
“The year was fairly predictable and brought no major surprises. The final result is slightly better than we anticipated,” Povilauskas said.
Lithuania’s central bank said sales rose across most major sectors last year, including industry, trade, services and construction. After a six-month pause, manufacturing sales showed signs of recovery in the fourth quarter.
“Manufacturing sales, adjusted for seasonal factors, grew for the first time in three quarters – modestly, by 0.3%, and were 1.8% higher than a year earlier,” said Darius Imbrasas, chief economist at the Bank of Lithuania’s Economics Department.
Citadele Bank economist Aleksandras Izgorodinas said 2025 was a good year given global market conditions, though growth drivers shifted markedly between the first and second halves.
“In the first half, all major sectors pulled the economy up – industry, retail, construction and real estate,” he said. “In the second half, industry entered stagnation, and growth was driven mainly by domestic sectors, especially construction and retail.”
Looking ahead, economists expect consumption to play a bigger role in 2026, supported by rising pensions, higher minimum wages and withdrawals from private pension funds. Public investment in infrastructure and defence and strong EU funding are also expected to boost growth.
At the same time, analysts caution that external competitiveness and export growth may remain constrained by weak demand in key foreign markets and ongoing tariff pressures, underscoring the need for fiscal restraint and productivity-enhancing reforms.
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