Signs of economic revival emerged both within Lithuania and across Europe in 2024. We witnessed a period of recovery and positive momentum for businesses in Lithuania. Businesses increased borrowing for expansion, and new companies were founded. Lithuania was among the leading performers in Europe: in the Global Digital Competitiveness Index, Lithuania ascended six places in 2024 to 22nd position among 67 countries. The startup ecosystem’s valuation reached €16 billion in 2024, representing a 39x increase over the past decade. Lithuanian startups attracted €128 million in investments in 2024, with early-stage VC investment reaching €108 million.

Small and Medium-sized Enterprises (SMEs) played a pivotal role in this period of economic stabilisation. SMEs make up 99% of all companies and employ approximately 75% of the Lithuanian workforce. Lithuanian exports grew by about 12% in 2024, with SMEs contributing 40% to this growth. The technology and biotechnology sectors led the expansion.

Initial 2025 Forecasts

As we looked towards 2025, we noted that Lithuania’s economy was forecast to grow by 3.1%, following a stronger-than-expected 2.6% GDP growth in 2024, reaching €77.8 billion. Key drivers included renewed investment and resilient consumption, aided by anticipated interest rate cuts by the European Central Bank. Unemployment was projected to fall to 7.1%, and wages to grow by 7.9% amid a tight labour market. Inflation was forecast at 1.7%, supporting a 3.3% rise in household consumption.

The actual economic growth and SME investment trends align well with 2025 expectations, although the GDP growth estimate is revised to 2.8% for the year. The European Central Bank (ECB) lowered key interest rates by 25 basis points in April 2025, reducing the deposit facility rate to 2.25%, which is conducive to cheaper borrowing costs. The monetary easing supports SME investment and expansion plans, especially in sectors like construction and real estate, which are expected to benefit from these lower rates.

SMEs are expected to lead the continued recovery in 2025 through increased investment, enhanced competitiveness, and expanding international trade. Despite ongoing challenges of financing, Lithuania’s growing fintech sector enhances financial inclusivity, of which EMBank is an example, providing SMEs with innovative digital banking tools and personalised services to navigate market shifts and scale globally. However, potential external shocks or policy changes were noted to pose serious challenges to this overall optimistic outlook.

Potential Challenges in 2025

Export and Trade Environment: US tariffs on EU imports pose a medium-term risk, potentially reducing Lithuania’s GDP by up to 1% over 4 years. The government has allocated €20 million to help exporters diversify markets and mitigate tariff impacts. The impact of US tariffs was anticipated, and the government’s proactive measures to support exporters and diversify markets are in place. While tariffs pose a risk, the SME sector’s dynamism and government backing help mitigate adverse effects. Export growth is strong, but SMEs could diversify strategically to mitigate the risks and sustain this momentum.

Financing and Digital Transformation: Access to finance still remains a challenge for Lithuanian SMEs, with financing difficulties having been reported at twice the EU average.

Nonetheless, SMEs in the energy sector were supported by the Ministry of Energy for the installation of solar power plants as well as for digitisation projects and other tech innovations. The Ministry of Economy and Innovation kept reducing SMEs’ administrative burden for the last 3 years by over €33 million by streamlining bureaucratic hurdles and improving regulations.

Furthermore, the rapid development of Lithuania’s fintech sector and support from institutions like the European Investment Bank (EIB) are improving financial inclusivity. In 2024, EIB Group financing in Lithuania totalled €449 million, supporting 1,200 SMEs and sustaining 19,000 jobs.

EU investment remains one of the most important sources of public investment: EUR 2.505 billion of EU structural funds and funds under the plan “New Generation Lithuania” (NGL) are planned to be allocated to various private and public sector projects this year. This is 1 EUR billion more than last year.

Technology Adoption: Digital transformation is critical for SME competitiveness. Around 62% of Lithuanian SMEs have yet to adopt advanced technologies such as cloud computing, IoT, and automation, largely due to financial and skills barriers. Government initiatives like the Smart Industry programme and Digital Innovation Centres, alongside EU-level Digital Decade targets, aim to accelerate technology uptake. SMEs that embrace digital tools and AI stand to gain efficiency and growth benefits.

Is 2025 The Right Time for SMEs to Invest?

Lithuania’s economic growth is outpacing much of Europe and offering a stable, predictable environment for business expansion. Lithuanian SMEs are generally performing well in early 2025, building on the strong recovery of 2024. Growth is back on track. Lower ECB interest rates and strong domestic consumption create a favourable time for SMEs to invest. AI today offers tangible opportunities to overcome demographic setbacks in order to increase productivity. Our advanced digital infrastructure, business-friendly regulatory framework, and competitive tax incentives make it easier to innovate, digitise, and reach new markets.

Banks and fintechs are offering tailored financial solutions, while EU and EIB-backed programmes unlock preferential loans and risk-mitigated funding for SMEs pursuing digital transformation, green energy, and export growth. The government’s economic transformation plan is injecting millions into AI, digital skills, and startup support so that Lithuanian SMEs get the tools and talent needed to compete globally. Lithuania’s EU membership, combined with a tech-savvy workforce and a thriving fintech ecosystem, means SMEs can scale up quickly, whether in energy, logistics, agriculture, or tech. Lithuanian firms are already outpacing the EU average in climate investment and digital adoption.

My view is that the risks of waiting are greater than the risks of taking action. For businesses looking to future-proof themselves, expand to new markets, and lead by innovation, now is the time to invest. EMBank’s role is to give businesses the necessary financial tools and expertise so that they capitalise on the economic revival while managing their risks.

EMBank gives out investment loans at competitive rates for SMEs to transform their business through investments and modernisation. It provides leasing as a convenient and fast financing solution for new equipment or vehicles. EMBank lends under ILTE (formerly INVEGA) Guarantee for Financing to ensure SMEs can access credit even when their collateral is not enough. The Bank also offers fast, reliable international payment services to support SMEs’ expansion both locally and internationally.

In short, EMBank is side by side with SMEs as they build Lithuania’s economy at the intersection of the physical and digital worlds, brick by brick and byte by byte.

Ekmel Cilingir
Chairperson of the Board of Directors, EMBank