Calculations by the Ministry of Economy and Innovation of Lithuania show that, due to negative demographic factors alone, Lithuania’s economy could be up to 7.2% smaller over the next 20 years than it would be under stable demographic conditions, the Economy and Innovations Ministry announced on April 2.

An ageing population and a shrinking working-age population will inevitably slow economic growth. According to Minister Edvinas Griksas, this does not mean an absolute economic decline, as technological progress and productivity will continue to drive growth, but it highlights the significant impact of demographic trends on the economy.

“If more well-paid jobs are created across the country, people are less likely to leave, while convenient infrastructure and investments in the regions encourage people to settle in smaller cities. Therefore, our key priority is to strengthen the regions by attracting investors who create high value-added jobs,” the minister said.

Griksas emphasised that efforts are being made to ensure Lithuania offers a predictable and investment-friendly environment. Legislative packages are currently being finalised to further improve the country’s attractiveness to investors.

“We are reducing excessive bureaucracy, improving the tax environment and preparing investment promotion measures. This will allow us to create new well-paid jobs more quickly and provide better conditions for people across the country to live, work and build families,” said the minister.

The ministry stresses that demographic challenges are directly linked to the country’s economic potential, meaning policy responses must focus on boosting productivity, encouraging investment and strengthening the labour supply.

Lithuania’s labour market challenges are structural and long-term, including a shrinking workforce, skills mismatches and rising demand in high value-added sectors. In response, the ministry is implementing comprehensive measures focused on investment promotion, innovation development and talent cultivation.

A strong focus is placed on attracting investment and strengthening regions. In 2025, four major investment agreements were signed, bringing the total to 22. Key projects include Pentasweet in Vilnius, Allive Europe in the Kaunas district, the development of a modern packaging plant in Jonava, and a military equipment factory in the Kaunas Free Economic Zone.

To improve the investment climate, regulatory procedures have been simplified, making Lithuania one of the fastest countries in the region for implementing investment projects. The administrative burden on businesses has also been reduced, falling by more than €21mn in 2025.