The latest industrial production data for Lithuania (LT) released on November 21, 2025, shows a contraction of 0.50% month-over-month (MoM), underperforming the 1.20% expected rise. This follows a sharper 2.00% decline in October, marking a third straight month of negative growth. The data, sourced from the Sigmanomics database, highlights ongoing volatility in LT’s manufacturing sector amid a complex macroeconomic environment.

Drivers this month

• Manufacturing output fell by 0.70%, driven by weaker demand in machinery and electronics.
• Energy production remained flat, constrained by supply-side bottlenecks.
• Construction-related industrial activity declined 0.30%, reflecting cautious investment sentiment.

Policy pulse

LT’s industrial output remains below the 12-month average growth rate of 0.60% MoM, signaling a slowdown relative to the broader 2025 trend. The central bank’s ongoing monetary tightening, with key rates raised by 75 basis points since mid-year, aims to curb inflation but may be dampening industrial activity.

Market lens

Following the release, the EUR/LTL currency pair saw a modest 0.10% depreciation, while 2-year LT government bond yields edged up 5 basis points, reflecting cautious investor sentiment. Breakeven inflation rates held steady, indicating stable inflation expectations despite the industrial slowdown.

Industrial production is a core macroeconomic indicator, closely linked to GDP growth, employment, and trade balances. Lithuania’s November print contrasts with the broader Eurozone’s modest 0.30% MoM industrial growth, underscoring LT’s relative weakness. Year-on-year (YoY), LT’s industrial output remains positive at 1.10%, but the MoM trend suggests emerging softness.

Monetary Policy & Financial Conditions

The Bank of Lithuania has aligned with the European Central Bank’s hawkish stance, raising interest rates to 3.50% to combat inflation running near 4.20%. Tighter credit conditions have increased borrowing costs for manufacturers, contributing to subdued investment and production.

Fiscal Policy & Government Budget

LT’s government has maintained a moderately expansionary fiscal stance, with a 2025 budget deficit target of 2.80% of GDP. Infrastructure spending and targeted subsidies for green manufacturing aim to support industrial modernization, but these measures have yet to offset cyclical headwinds fully.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Eastern Europe and supply chain disruptions continue to impact LT’s export-oriented industries. Energy price volatility and trade uncertainties with key partners, including Russia and the EU, add to the risk profile.

Historical context shows that LT’s industrial production has been volatile throughout 2025, with peaks of 4.50% in February and troughs of -3.00% in May. The current trend suggests a fragile recovery, vulnerable to external shocks and domestic policy tightening.

Drivers this month

• Export orders declined by 1.20%, reflecting weaker demand from EU partners.
• Domestic consumption of industrial goods slowed, contributing -0.20 pp to the overall decline.
• Energy sector output stabilized but failed to provide growth support.

Policy pulse

The industrial production figure remains below the central bank’s neutral growth threshold of 0.50% MoM, indicating that monetary policy may be constraining industrial expansion.

Market lens

Immediate reaction: EUR/LTL dipped 0.10%, LT 2-year yields rose 5 bps, signaling cautious market sentiment. Equity indices such as OMXLT showed muted responses, reflecting uncertainty over industrial sector prospects.

Looking ahead, Lithuania’s industrial production trajectory depends on several factors, including monetary policy, external demand, and structural reforms. We outline three scenarios:

Bullish Scenario (25% probability)

• Global demand recovers sharply in Q1 2026, boosting exports by 3%.
• Monetary policy stabilizes, with no further rate hikes.
• Government’s green industrial initiatives accelerate productivity gains.
• Industrial production rebounds to 1.50% MoM by Q2 2026.

Base Scenario (50% probability)

• Modest global growth with continued supply chain normalization.
• Monetary policy remains restrictive but stable.
• Industrial output grows slowly, averaging 0.30% MoM through mid-2026.
• Fiscal support cushions downside risks but does not spur strong acceleration.

Bearish Scenario (25% probability)

• Geopolitical tensions escalate, disrupting exports and energy supplies.
• Further monetary tightening to combat inflation pressures.
• Industrial production contracts by up to -1.00% MoM in early 2026.
• Rising unemployment and investment pullback deepen recession risks.

Overall, the base case foresees slow growth with downside risks from external shocks and tighter financial conditions. Policymakers face a delicate balance between inflation control and growth support.

Lithuania’s November 2025 industrial production data reveals a sector under pressure. The -0.50% MoM contraction, while less severe than October’s -2.00%, underscores persistent challenges from monetary tightening, geopolitical risks, and uneven demand. The data suggests a cautious near-term outlook, with fiscal policy and structural reforms playing critical roles in stabilizing growth.

Market participants should monitor upcoming inflation prints, central bank communications, and geopolitical developments closely. The interplay between these factors will shape LT’s industrial trajectory and broader economic health in 2026.

Selected tradable symbols relevant to this analysis include: OMXLT (Lithuanian stock index, sensitive to industrial sector trends), EURUSD (currency pair influencing export competitiveness), EURLTL (local currency pair reflecting domestic financial conditions), MTU (major industrial manufacturer listed in the region), and BTCUSD (crypto asset reflecting risk sentiment).