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Country Report Lithuania Product Image

Country Report Lithuania

  • ID: 2138679
  • January 2015
  • Region: Lithuania
  • 25 Pages
  • The Economist Intelligence Unit

By adopting the euro, Lithuania is joining a bloc that it is already highly integrated with in terms of trade. Accession will be conducive for economic growth in the forecast period and will remove exchange-rate risks, an important factor given the high volume of domestic credit denominated in euros. Politically, given tense relations with Russia, deeper integration into European structures will reassure Lithuania of its position in the West.

Lithuania joined the euro zone on January 1st 2015, meaning that for the first time since April 1992 all three Baltic countries share the same currency. The euro replaces the litas, in circulation from June 1993 and which was pegged to the US dollar from April 1994 until February 2002, when it was replaced with a peg to the euro. Lithuania joined the European exchange-rate mechanism (ERM II) in June 2004 as preparation for an early introduction of the euro. This was first attempted in 2006, but rejected by the European Commission owing to a breach of the inflation criterion stipulated by the Maastricht Treaty.

Following the introduction of the euro in Estonia in 2011 and Latvia in 2014 all three Baltic countries now share the same level of Western integration as members of the EU, the Schengen area, the euro zone and NATO. Politically, the Baltic "reintegration" and stronger ties with the West will be reassuring domestically, given the current tensions with Russia. This is reflected in the unusually strong popularity of joining the single-currency area, with 63% in favour-up by 13 percentage points from June 2014-according to the latest Eurobarometer survey.

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Country Report Lithuania

Cementing ties with the West
Moderate positive macro impact expected
Competitiveness and fiscal discipline remain a concern

Note: Product cover images may vary from those shown
Note: Product cover images may vary from those shown


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