Republic of Lithuania

Lithuania needs sustained productivity gains to ensure higher living standards and convergence with Western Europe. This is the only way to address, or even reverse, negative demographic dynamics. Macroeconomic and financial stability is a pre-requisite for sustained growth and has been achieved through prudent policies and labor market flexibility. Nevertheless, significant and well-identified structural challenges have yet to be addressed with ambitiously designed and decisively implemented productivity-enhancing reforms. The current expansionary cyclical environment as well as strong fiscal and external positions provide an ideal opportunity to address these challenges.