Prior to recession that started in 2008, economy of Lithuania was found to be growing at the rate of 8%. In 2004 the country joined in European Union. It has also joined World Trade Organization. Most of the trades take place with Russia and other neighbors that are located in Eastern Europe. The process of turning old traditional Lithuanian economy into a market economy is almost complete. Most of the state owned organizations have been made private.
The recent global recession that started from mid of 2008, has greatly affected the economy of the country. In 2007 Lithuania’s real GDP was growing at the rate of almost 8%, but in 2008 the figure came down to 3%. In 2009 the country’s GDP shrank at the rate of 16.8%. Such negative growth is mainly due to the global financial meltdown that has affected almost all the developed and developing economies in the world. In 2008 Lithuania’s GDP per capita was $18,000 and in 2009 the figure reduced to $15,000 per capita. According to the prediction of Bloomberg, Lithuanian economy might have positive growth in 2010. It is also predicted that in 2011 the economy might grow at the rate of 4% (Hõbemägi, December 23, 2009).
In 2008, unemployment rate was almost 5.84%, but in 2009 it increased to 15%. Inflation rate has decreased from the past. In 2008 inflation rate in the country was 10.9% and in the next year it was around 4.7% (Central Intelligence Agency, n.d.).
Lithuania’s economy was in growth track prior to the recession period. In 2007 GDP growth rate was 8.9%, but in the next year this rate was 3% and 2009 Lithuania’s economy was having negative growth rate. It is predicted that in 2010 economy will return on growth track. In 2011 economy is expected to grow at the rate of 3-4%. In 2008 discount rate offered by central bank was 4.73% which is almost unchanged from the previous year when the rate was 4.82%.
Hõbemägi, T. December 23, 2009, SEB: Lithuanian economy to expand 4% in 2011, Baltic