The latest GDP growth rate for Lithuania (LT) registered 2.00% year-over-year (YoY) in December 2025, according to the Sigmanomics database. This figure exceeded the consensus estimate of 1.70% but represents a slowdown from the 3.20% recorded in October 2025. The data reflects a cooling phase following a robust expansion earlier this year, where growth peaked at 3.80% in January and February 2025.

Drivers this month

• Domestic consumption contributed approximately 0.90 percentage points (pp) to growth, supported by wage gains and stable employment.
• Investment growth slowed, subtracting 0.30 pp amid tighter credit conditions.
• Net exports added 0.40 pp, benefiting from a weaker euro and resilient external demand.

Policy pulse

Monetary policy remains restrictive, with the European Central Bank maintaining key rates above neutral to combat inflation. Lithuania’s inflation rate, though easing, remains above the 2% target, limiting scope for rate cuts. Fiscal policy continues to provide moderate stimulus through infrastructure spending and social transfers, cushioning the growth slowdown.

Market lens

Following the GDP release, the EUR/LTL currency pair showed mild appreciation, reflecting confidence in Lithuania’s economic resilience. Short-term government bond yields edged higher, pricing in persistent inflation risks and cautious monetary policy stance.

Core macroeconomic indicators underpinning Lithuania’s growth trajectory reveal a mixed picture. Employment growth remains steady at 1.50% YoY, while wage inflation accelerated to 4.20%, supporting household spending. Inflation moderated to 3.10% YoY in November 2025, down from a peak of 5.00% in mid-2025, but still above the ECB’s target.

Monetary Policy & Financial Conditions

The ECB’s deposit rate stands at 3.75%, unchanged since September 2025, maintaining tight financial conditions. Credit growth to the private sector slowed to 2.00% YoY, reflecting cautious bank lending amid global uncertainties. The LT banking sector remains well-capitalized, but risk premiums have widened slightly.

Fiscal Policy & Government Budget

Lithuania’s fiscal deficit narrowed to 2.50% of GDP in Q3 2025, down from 3.10% a year earlier. Government spending on infrastructure and social programs increased by 5.00% YoY, supporting demand. Public debt remains manageable at 38% of GDP, providing room for counter-cyclical measures if needed.

External Shocks & Geopolitical Risks

Heightened geopolitical tensions in Eastern Europe and supply chain disruptions continue to pose risks. Energy price volatility and trade uncertainties with key partners, including Russia and the EU, could dampen export growth. The LT economy’s exposure to global tech supply chains also adds vulnerability.

Drivers this month

• Consumption growth: 0.90 pp
• Investment drag: -0.30 pp
• Net exports boost: 0.40 pp
• Inventory changes: neutral

Policy pulse

Growth remains below the 3.00% average seen in early 2025, reflecting the lagged impact of ECB rate hikes. Inflation pressures are easing but remain above target, limiting policy easing prospects.

Market lens

Immediate reaction: EUR/LTL rose 0.15% within the first hour post-release, while 2-year Lithuanian government bond yields climbed 5 basis points, signaling cautious optimism tempered by inflation concerns.

Looking ahead, Lithuania’s GDP growth faces a balanced set of risks. The baseline scenario projects growth stabilizing around 2.00–2.50% YoY over the next two quarters, supported by steady consumption and fiscal stimulus. The probability of this scenario is approximately 55%.

Bullish scenario (25% probability)

• Faster inflation easing leads to ECB rate cuts in H2 2026.
• Stronger export demand from EU recovery boosts manufacturing.
• Investment rebounds as credit conditions ease.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, disrupting trade and energy supplies.
• Inflation remains sticky, forcing prolonged monetary tightening.
• Global financial market volatility triggers capital outflows.

Structural trends such as digital transformation and labor market shifts will shape medium-term growth. Lithuania’s demographic challenges and productivity improvements remain key factors for sustainable expansion.

Lithuania’s December 2025 GDP growth rate of 2.00% YoY signals a moderation from earlier peaks but confirms ongoing economic resilience amid tightening financial conditions and external risks. Policymakers face the challenge of balancing inflation control with growth support. The interplay of fiscal stimulus, monetary policy, and global developments will be critical in shaping the near-term outlook.

Investors should monitor inflation trends, ECB policy signals, and geopolitical developments closely. Lithuania’s integration in the EU and its dynamic domestic market provide a solid foundation, but vigilance is warranted given the evolving macro landscape.

Key Markets Likely to React to GDP Growth Rate YoY

The GDP growth rate is a vital indicator for markets tracking Lithuania’s economic health. Key assets historically sensitive to this data include LT government bonds, the EUR/LTL currency pair, and regional equity indices. These markets adjust quickly to shifts in growth expectations, monetary policy outlook, and geopolitical risks.

• EURLTL: The currency pair reflects investor confidence and monetary policy expectations tied to GDP trends.
• OMXH25: Nordic-Baltic equity index sensitive to regional economic growth.
• SEB: A major Nordic bank with exposure to Baltic economies, including Lithuania.
• BTCUSD: Bitcoin often reacts to macro risk sentiment shifts triggered by growth data.
• USDEUR: Reflects broader Eurozone economic sentiment impacting Lithuania.

Insight: Lithuania GDP Growth Rate vs. EURLTL Since 2020

Since 2020, Lithuania’s GDP growth rate and the EUR/LTL exchange rate have exhibited a positive correlation. Periods of accelerating GDP growth often coincide with EUR/LTL appreciation, reflecting stronger economic fundamentals and improved investor sentiment. For example, the 3.80% growth peaks in early 2025 aligned with a 4% currency appreciation. Conversely, growth slowdowns have led to currency depreciation, highlighting the pair’s sensitivity to domestic economic performance.

FAQs

What does the latest GDP Growth Rate YoY for LT indicate?

The 2.00% YoY growth rate indicates moderate economic expansion, slower than earlier 2025 peaks but above market expectations, signaling resilience amid tightening policies.

How does Lithuania’s GDP growth affect monetary policy?

GDP growth influences ECB decisions on interest rates; moderate growth with persistent inflation suggests continued restrictive policy to balance inflation and growth.

What are the main risks to Lithuania’s economic outlook?

Key risks include geopolitical tensions, inflation persistence, tighter credit conditions, and global financial market volatility impacting trade and investment.

Takeaway: Lithuania’s GDP growth is moderating but remains robust enough to sustain economic stability amid tightening monetary conditions and external uncertainties.

Author: Sigmanomics Editorial Team

Updated 12/1/25

Sources

1. Sigmanomics database, GDP Growth Rate YoY for LT, December 2025 release.
2. European Central Bank, Monetary Policy Decisions, November 2025.
3. Lithuanian Department of Statistics, Economic Indicators, Q3 2025.
4. International Monetary Fund, Regional Economic Outlook, October 2025.