The Lithuanian economy has proved relatively resilient to the pandemic shock. GDP is projected to grow by close to 4% per annum in 2021 and 2022. Pent-up demand and strengthening investment will support the recovery, as confidence improves with the rollout of vaccines. Nevertheless, unemployment will remain above the pre-pandemic level. Higher oil prices and firmer domestic demand will push up inflation.
Fiscal policy continues to support the recovery, even though less comprehensively than in the early stages of the pandemic. Increasingly targeted measures are appropriate to underpin the recovery. Reducing poverty should remain a policy priority. The work support scheme and higher social benefits are protecting the most vulnerable groups. Effective job assistance and training and re-training programmes are vital for the reallocation of workers and sustainable growth.