In brief

• Swedbank cut its 2026 forecast for Lithuania's GDP growth to 2.7% and expects 1.8% in 2027, the slowest in the Baltics.
• The one-off spending of about 1.5 billion euros from pension funds will not repeat, and EU recovery funds are running out.
• SEB also lowered its 2026 forecast to 2.7% and raised its 2027 inflation forecast to 4.4%.

Growth forecast cut for 2026

Swedbank has lowered its forecast for Lithuania's gross domestic product this year to 2.7%, down from the 3% it projected in August (Ekonomikos apžvalga: lėtesnis augimas ant plono ledo – Bernardinai.lt) (N. Mačiulis: tai nėra krizė ar stagnacija, tai yra nauja realybė – Bernardinai.lt) (N. Mačiulis: Lietuvos išskirtinumas prieš kitas Baltijos šalis baigiasi – vz.lt). For 2027 the bank expects growth to slow further to 1.8%, the weakest pace in the Baltic region. Latvia and Estonia are expected to grow faster, with both forecast at slightly above 2% next year.

Why the slowdown

Chief economist Nerijus Mačiulis said the economy got a temporary boost this year from roughly 1.5 billion euros that residents withdrew from second-pillar pension funds and spent (Mačiulis: tai nėra krizė, tai – nauja realybė – Diena.lt). That support will not repeat in 2027. He added that money from the EU Recovery and Resilience Facility is running out, which means public spending, private investment or other funding sources will have to fill the gap. Export markets also face more obstacles, which will weigh on the growth of goods and services sales abroad.

Five years of outperformance ending

Mačiulis said Lithuania had enjoyed a strong stretch since 2023, with GDP growing about 3% a year, the fastest in the region. He described the current situation as a shift in conditions rather than a crisis or stagnation, and said the period of leading the Baltics is over.

Separate outlook from SEB

SEB economists have also reduced their 2026 forecast for Lithuania, from 3% to 2.7%, citing weaker-than-expected third-quarter results (T. Povilauskas: trumparegiški valdžios sprendimai didina Lietuvos ekonomikos svyravimus – vz.lt). They project 2.1% growth for 2027 and have raised their inflation forecast for next year from 3.5% to 4.4%. SEB expects Latvia to grow faster than Lithuania this year, at 3%, while Estonia is forecast at 2.5%.

What comes next

Both banks see the slowdown in household consumption as the central issue. Slower wage growth will also reduce the rate at which state budget revenues increase.