Lithuania is strategically situated at the crossroads of Europe and Eurasia. It offers investors a diversified economy, EU rules and norms, a well-educated multilingual workforce, advanced IT infrastructure, and a stable democratic government. The Lithuanian economy has been growing steadily since the 2009 economic crisis and only contracted slightly in 2020 due to economic fallout from the COVID-19 pandemic. It recovered rapidly in 2021, reaching 5.1 percent GDP growth thanks to budget surpluses and accumulated financial reserves prior to the crisis, as well as a well-diversified economy. Despite the impacts of Russia’s war with Ukraine, GDP growth continued in 2022 (2.2%) though growth is expected to slow in 2023. Disruptions caused by the war in Ukraine drove one of the highest inflation rates in the Eurozone, 21.7% in December 2022, primarily because of dramatically rising energy and electricity prices. Economists expect GDP growth to be close to zero in 2023, though also expect inflation to slow to single digits in 2023. The country joined the Eurozone in January 2015 and completed the accession process for the Organization for Economic Cooperation and Development (OECD) in May 2018. In terms of average net monthly wages, Lithuania ranks 15th of 27 EU member states. According to Bank of Lithuania statistics, in 2022 the United States was Lithuania’s 16th largest investor, with cumulative investments totaling $390 million (1.2 percent of total FDI).
The current government elected at the end of 2020 has continued prior governments’ efforts to improve the business climate and lower barriers to investment. In 2013, the government passed legislation which streamlined land-use planning, saving investors both time and money. In July 2017, the government introduced the new Labor Code which is believed to better balance the interests of both employees and employers, and in 2020 it introduced a law on the exemption of profit tax for a period of up to 20 years for large and significant investments to the country.
The government provides equal treatment to foreign and domestic investors and sets few limitations on their activities. Foreign investors have the right to repatriate or reinvest profits without restriction and can pursue investor-State dispute settlement under relevant treaty provisions. Lithuania offers special incentives, such as tax concessions, to both small companies and strategic investors. Incentives are also available in seven Special Economic Zones located throughout the country. Lithuania is a partner is the regional Three Seas Initiative.
U.S. executives report some burdensome procedures to obtain business and residence permits, and limited instances of low-level corruption in government. Transportation barriers, especially insufficient direct air links with some European cities, remain a hindrance to investment, as does a lack of transparency and focus on low-cost bids in government procurement. Rapid wage growth and a limited supply of labor are other common concerns expressed by U.S. businesses operating in Lithuania.
Lithuania offers many investment opportunities in most of its economic sectors. The sectors which to date have attracted most investment include Information and Communication Technology, Biotech, Metal Processing, Machinery and Electrical Equipment, Plastics, Furniture, Wood Processing and Paper Industry, Textiles and Clothing. Lithuania also offers opportunities for investment in the growing sectors of Real Estate and Construction, Global Business Services, Financial Technologies, Biotech and Lasers.
|TI Corruption Perceptions Index||2022||33 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||2022||39 of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2021||USD 230||https://apps.bea.gov/international/factsheet|
|World Bank GNI per capita||2021||USD 21,740||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|