Economic growth ebbs in the third quarter of 2025

Economy hits a bump in the road: GDP grew 2.1% in annual terms in Q3, following a 3.2% expansion in the previous quarter. Q3's reading was the weakest since Q2 2024. In seasonally adjusted quarter-on-quarter terms, GDP flatlined in Q3, following 0.6% growth in the previous quarter.

Momentum decelerates across the board: Relative to the previous quarter's data, readings in Q3 worsened for private consumption (+1.8% on a year-on-year basis vs +3.0% in Q2), government consumption (+1.0% vs +1.7% in Q2), fixed investment (+8.0% vs +8.8% in Q2) and exports of goods and services (+2.8% vs +4.3% in Q2). In contrast, the reading for imports of goods and services improved in Q3 (+7.4% vs +7.3% in Q2). Household spending was likely hurt by uncertainty arising from the government’s collapse in August and rising consumer price inflation, which squeezed real wages. Moreover, goods exports swung into decline and hit a three-quarter low, as the boost from pre-tariff export frontloading faded.

Economy to regain speed in 2026: Looking ahead, our panelists expect annual GDP growth to end 2025 on a weaker note than in 2024 but to gradually pick up pace through the end of next year. In 2026, lower inflation, healthy wage growth and a tighter labor market should boost private spending, while an expansionary fiscal stance linked to higher defense spending should provide a tailwind to investment. Softer-than-expected EU demand is a key downside risk to GDP growth.

Panelist insight: EIU analysts commented on the outlook: “The slowdown in the third quarter is sufficient for us to revise down our estimate for 2025 as a whole, but we do not expect it to represent the beginning of a slump. There are some indications that inflation is beginning to ease (even as the year-on-year figure picked up in October, prices fell in monthly terms in September and October), and the imminent surge in defence-related spending will also put a floor under economic growth. We have also recently revised up our forecast for the US economy and lowered our forecast for the global oil price in 2026, both of which should prove beneficial to Lithuania.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Lithuanian government consumption projections for the next ten years from a panel of 8 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Lithuanian government consumption.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Lithuanian government consumption projections.

Want to get access to the full dataset of Lithuanian government consumption forecasts? Send an email to info@focus-economics.com.