Economy

In 2003, prior to joining the European Union, Lithuania had the highest economic growth rate amongst all candidate and member countries, reaching 8.8% in the third quarter. In 2004 -7.3%; 2005 - 7.6%; 2006 - 7.5% growth in GDP reflected impressive economic development. Most of the trade Lithuania conducts is within the European Union.

Lithuania is a member of the World Trade Organisation, and the European Union. By UN classification, Lithuania is a country with a high average income. The country boasts a well developed modern infrastructure of railways, airports and four lane highways. It has almost full employment, with an unemployment rate of only 3.7% in 2006, based on survey data. According to officially published figures, EU membership fuelled a booming economy, increased outsourcing into the country, and boosted the tourism sector. The litas, the national currency, has been pegged to the Euro since February 2, 2002 at the rate of EUR 1.00 = LTL 3.4528, and Lithuania is expected to switch to the Euro on 1 January 2009.

Like other countries in the region (Estonia, Latvia) Lithuania also has a flat tax rate rather than a progressive scheme. Lithuanian income levels still lag behind the rest of the older EU members, with per capita GDP in 2007 at 60% of the EU average. Lower wages may have been a factor that in 2004 influenced the trend of emigration to wealthiest EU countries, something that has been made legally possible as a result of accession to the European Union. In 2006, income tax was reduced to 27% and a further reduction to 24% is expected in October of 2007. Income tax reduction and 14% annual wage growth is starting to make an impact with some emigrants gradually beginning to come back. The latest official data show emigration in early 2006 to be 30% lower than the previous year, with 3,483 people leaving in four months.