Similar to the other two Baltic states, Lithuania’s economy has gone from boom to bust over the course of the decade. After growing at an annual average rate of over 8% from 2003-07, the economy slowed sharply in 2008 and contracted almost 15% in 2009.
Accompanying the boom years was a build-up in external imbalances (e.g., double-digit current account deficits), which are now unwinding. Consumption represents the largest component of GDP, with its share almost two-thirds of total GDP. Lithuania is also a relatively open economy, as exports and imports both more than 50% of GDP.
Lithuania is the largest of the Baltic economies but is quite small compared to most other EU economies. Based on 2009 GDP, Lithuania is the 78th largest economy, ranking behind Sri Lanka and Tunisia, according to the World Bank. The population numbers 3.6 million.
Lithuania’s top export products include mineral products, chemicals, and machinery and equipment. In contrast to the other Baltics, Russia is by far Lithuania’s top trade partner, and the CIS is the destination for more than 20% of exports. Germany, Latvia and Poland rank among other large export destinations.
The Lithuanian currency is pegged to the euro under a currency board arrangement. The country eventually plans to adopt the euro, but adoption is unlikely to occur until 2014 or later due to mounting budget deficits.
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