Lithuania’s economy has been growing at one of the highest growth rates in Europe. In 2005, the GDP grew steadily by 7.5%, as compared to the year 2004, and amounted to 20, 49 milliard euros.
The growth in domestic demand, investment and exports of goods and services are the main contributors to this boom. Membership of the EU accelerates this impressive growth further due to continued economic integration into the EU market, free market access for Lithuanian exporters, and the effective use of EU structural funds. It is estimated that with EU membership, Lithuania’s economy should grow additionally by 1.5% per year.
The inflation rate in Lithuania is one of the lowest in Europe. In 2005 the recorded average annual inflation rate was 2, 7%. It is projected that average annual inflation will remain low.
Monetary policy is based on a currency board. The national currency, the litas, has been stable since 1994. The Bank of Lithuania re-pegged the Litas from the US dollar to the Euro on 2 February 2002 at a fixed rate of 3.4528 Litas to one Euro. Lithuania awaits the decision of the European Commission later this spring as to whether it can become a member of the European Monetary Union in 2007.
The Lithuanian labour force comprises 1.6 million people, of which more than two-thirds are employed in the private sector. The country has one of the most educated labour force in Europe.
Lithuania pursues a liberal foreign trade policy, which has resulted in a rapid growth of foreign trade turnover. Major export positions are mineral products, machinery and electric equipment, textiles and textile articles. The country imports mainly mineral products, machinery and electric equipment, means of transport and transport equipment. The largest trade partners are the EU countries.
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