Successfully investing in Lithuania

last updated on 10 October 2025 | reading time approx. 7 minutes

How do you assess the current economic situation in Lithuania? »
How would you describe the investment climate in Lithuania? Which sectors offer the largest potential? »
What challenges do German companies face during their business ventures into Lithuania? »
How is the market for renewable energies developing in Lithuania? »
In your opinion, how will Lithuania develop? »

How do you assess the current economic situation in Lithuania?

According to data from the Bank of Lithuania, the national economy was experiencing strong momentum at the close of 2024. Despite global uncertainties, Lithuania has maintained economic resilience, and this positive trend is expected to persist throughout 2025, driven by increasing domestic demand and improving conditions in external markets. Economic expansion this year will be supported by rising household spending, greater private sector investment, and a recovery in export performance.

Inflation is anticipated to be somewhat higher in 2025 compared to the previous year. However, by 2026, inflationary pressures are forecasted to ease, aligning more closely with the levels typically seen in economies approaching Western European standards of living. While the outlook for Lithuania’s economic growth remains optimistic in 2025, several downside risks remain and could alter the trajectory significantly if materialized.

A notable demographic trend has contributed to economic dynamics: for the third consecutive year, Lithuania’s population has grown, adding more participants to the labor force. As a result, unemployment has fallen to its lowest point in two years, with expectations of continued improvement in the job market.

In terms of trade, export growth slowed in the latter half of 2024, while imports continued to rise. Looking ahead, both exports and imports are projected to accelerate between 2025 and 2027, reflecting stronger global demand and increased competitiveness of Lithuanian goods and services.

In April 2024, Moody’s Investors Service reaffirmed Lithuania’s long-term credit rating at ‘A2’ with a stable outlook, reflecting confidence in the country’s economic stability. Similarly, Fitch Ratings maintained Lithuania’s long-term credit rating at ‘A’, also with a stable outlook, signaling sustained fiscal responsibility and macroeconomic resilience.

Lithuania’s favorable investment and business environment is further highlighted in the 2024 International Tax Competitiveness Index, where the country ranked 5th among OECD nations with a score of 79.5. The ranking emphasized several strengths of Lithuania’s tax system: generous tax treatment for business investments in machinery, buildings, and intangible assets; a corporate tax rate of 15 percent, significantly below the OECD average of 23.9 percent; and a relatively flat labor tax structure that raises revenue efficiently with minimal economic distortion.

The 2024 Index of Economic Freedom ranked Lithuania 16th globally out of 184 countries, assigning it an overall score of 74.6 and classifying the economy as “mostly free.” This high ranking reflects Lithuania’s progress in transitioning to a market-oriented economy, supported by the rule of law, structural reforms, and a dynamic private sector. A competitive tax regime, streamlined regulatory processes, and policies promoting international trade have fostered broad-based economic growth. The entrepreneurial environment is considered efficient and relatively free from bureaucratic constraints, though the labor market, while reformed, still retains some rigidities.

Further affirming Lithuania’s economic standing, the country placed 30th out of 67 economies in the 2024 IMD World Competitiveness Index, published by the Swiss Institute of International Management. The index evaluates countries based on 336 criteria related to long-term value creation and business environment quality, highlighting Lithuania’s ability to sustain competitiveness through effective management of economic and institutional capacities.

How would you describe the investment climate in Lithuania? Which sectors offer the largest potential?

Lithuania remains an attractive destination for foreign investors. According to the Central Bank of Lithuania, as of 31 December 2024, Lithuania’s investment climate continues to demonstrate strong momentum, with cumulative foreign direct investment (FDI) rising by 7.6 percent year-over-year to reach 38.2 billion euros. This figure represents approximately 49.1 percent of the country’s GDP, and an FDI per capita of 13,234 euros, underscoring Lithuania’s significant appeal to international investors relative to its population size.

The primary sources of FDI were Germany (5.9 billion euros), the Netherlands (5.3 billion euros), Estonia (3.8 billion euros), Sweden (3.7 billion euros), and Latvia (2.5 billion euros). The financial and insurance sector accounted for the largest share of this investment, totaling 13.6 billion euros, reflecting Lithuania’s growing status as a regional hub for fintech and financial services.

According to Invest Lithuania, the national investment promotion agency, 47 new investment projects were secured in 2024, amounting to 351 million euros. These projects are set to contribute notably to job creation and the transfer of technology, particularly in high-value-added sectors.

Lithuania offers a highly favorable investment environment, marked by macroeconomic stability, EU membership, a competitive tax regime and a well-educated, multilingual workforce. Its strategic location, bridging Western Europe and Eastern markets, further enhances its appeal to global businesses looking to establish or expand operations in the Baltic region.

Among the sectors offering the greatest potential for investment, technology and information and communication technologies (ICT) stand out prominently. Lithuania has emerged as a dynamic digital economy, particularly strong in fintech, cybersecurity, and artificial intelligence.

The manufacturing and industrial engineering sector also continues to draw investment, particularly in areas such as automotive components, electronics, and precision engineering. This is supported by modern infrastructure, efficient logistics, and a skilled labor force.

In life sciences and biotechnology, Lithuania is one of the fastest-growing players in the European Union. The country aims to generate 5 percent of its GDP from the life sciences sector by 2030, and is home to a network of innovative biotech companies and research institutions with strong global ties.

Renewable energy is another high-potential area, driven by ambitious sustainability targets and access to EU funding. Lithuania is actively developing wind, solar, and hydrogen energy projects, with the government targeting 100 percent renewable electricity consumption by 2030.

Financial services remain a key area of opportunity, supported by a progressive central bank and fast-track licensing procedures that have made Lithuania one of the most fintech-friendly jurisdictions in the EU.

Lastly, the defence and dual-use technologies sector is gaining strategic importance, with increased public investment and growing interest in innovations such as drone technology, cybersecurity, and advanced communications systems. This sector offers significant prospects for international cooperation and private sector involvement.

In conclusion, Lithuania offers a robust and dynamic investment climate, underpinned by stability, innovation and strategic geographic positioning. The country presents substantial opportunities for long-term growth, particularly in high-tech, sustainable industries and sectors aligned with both national objectives and broader EU priorities.

What challenges do German companies face during their business ventures into Lithuania?

Geopolitical Risks

The ongoing geopolitical tensions in the region, particularly due to the proximity to Belarus and Russia, pose a significant challenge. Financial transactions involving these countries through Lithuanian banks are no longer possible, which can complicate supply chains and cross-border operations.

Language Barrier

There is a notable shortage of German-speaking professionals in Lithuania. While English is widely spoken, many German companies still prefer or require German language skills, especially in customer service, sales, and technical roles. This shortage can hinder recruitment and operational efficiency.

Labor Market Constraints

Although Lithuania has a relatively stable labor market, the competition for skilled workers − especially in IT, engineering, and manufacturing − is intense. German companies may struggle to attract and retain talent in these sectors.

Cultural and Administrative Differences

Differences in business culture, regulatory expectations, and administrative procedures can lead to misunderstandings or delays. German firms may need to adapt to a more flexible and less hierarchical business environment compared to Germany.

How is the market for renewable energy developing in Lithuania?

On February 9, 2025, at 2:05 p.m., the Baltic countries − Lithuania, Latvia, and Estonia − began operating at a single frequency in the synchronous zone of continental Europe. This marks the final disconnection from Russia's electricity grid and a historic step toward strengthening the energy independence and resilience of the Baltic region. This marks the final disconnection from the Russian power grid and a historic step towards strengthening the energy independence and resilience of the Baltic region.

The synchronization of the Baltic countries is a mega project that has taken almost two decades to complete.

Today, the Baltic countries' electricity grids operate successfully in a single synchronized space together with the systems of other European countries, ensuring greater energy security and stability and greater opportunities for renewable energy.

Lithuania is making significant strides in developing its renewable energy market, with ambitious goals and active projects shaping its energy future.

Lithuania is aiming to achieve 100 percent renewable electricity generation by 2030 and full energy self-sufficiency by 2035. The country has sufficient renewable energy resources − especially in wind and solar − along with flexible generation capacity and strong interconnections with neighboring EU countries. This enables Lithuania to meet its projected electricity demand with renewables under various modeled scenarios.

A major offshore wind project is underway: a 735 MW wind farm developed by Ignitis Renewables and Ocean Winds, with a 41-year permit and expected to be operational by 2030. The investment is valued at 1.8 billion euros.

To support the growing share of renewables, Lithuania is prioritizing electricity grid upgrades. This includes enhancing capacity and reliability to prevent market saturation and align with EU electricity grid synchronization.

Lithuania is also exploring hydrogen production and energy storage as part of its long-term strategy. These technologies are being evaluated for their role in industrial and transportation sectors

In your opinion, how will Lithuania develop?

Lithuania’s economy continues to demonstrate exceptional resilience despite a challenging external environment and it remains on a positive growth trajectory. Driven by a strong increase in private consumption and a recovery in investment, the economy is projected to grow by nearly 3 percent in 2025, with a similar pace expected in 2026 and 2027.

The Bank of Lithuania has made no significant revisions to its economic growth forecasts. Gross domestic product (GDP) is expected to increase by 2.9 percent in 2025, followed by growth of 3 percent in both 2026 and 2027.

Investment is projected to rebound as early as 2025, primarily supported by the private sector. This recovery will be bolstered by the ongoing momentum of the Recovery and Resilience Facility (RRF) and initiatives funded through the European Union’s latest financial framework. According to the Bank of Lithuania, investment is forecast to grow by 6.6 percent in 2025, 5.5 percent in 2026, and 3.1 percent in 2027.

As a result of these dynamics, average annual inflation is expected to rise temporarily to 3.3 percent in 2025 before stabilizing at a more typical rate of 2.6 percent in 2026 and 2027.

To sum up, Lithuania is poised for stable economic development throughout the remainder of 2025 and into 2026, supported by strong domestic demand and a recovery in investment. While inflation is expected to rise temporarily, the overall outlook remains positive, underpinned by EU-funded initiatives and a resilient private sector. This positions Lithuania well for sustained, balanced growth despite ongoing external uncertainties.