Lithuanian Ministry of Finance Economic Outlook: 9.4% Wage Growth and 5% Inflation

The Ministry of Finance of the Republic of Lithuania has released its updated economic development scenario for 2026–2029. In accordance with the Law on Fiscal Governance, these projections serve as the mandatory legal framework for preparing the draft state and municipal budgets for 2027–2029.

Lithuania's real GDP is projected to expand by 2.9% in 2026 (revised down from 3.1% projected in March), before decelerating to 2.2% in 2027. Unemployment is estimated at 6.8% for 2026, with an employment increase of 0.3%.

The most significant revisions appear in wage and price forecasts. The annual projection for average gross monthly wage growth in 2026 has been adjusted upward to 9.4% (up from 7.9% in the spring forecast), with an expected 7.2% growth in 2027. Concurrently, average annual inflation for 2026 is now projected at 5.0%, which is 1.3 percentage points higher than estimated in March.

When planning 2027 corporate budgets and payroll allocations, finance managers and accounting departments should evaluate the following structural factors:

1. Remuneration policy adjustments. Under Article 140 of the Lithuanian Labor Code, employer remuneration structures must align with prevailing labor market conditions. A nationwide wage increase of 9.4% alongside 5% inflation requires recalculating salary bands to sustain workforce retention.

2. Anticipated minimum wage and tax baseline shifts. Accelerated average wage growth increases the baseline for setting the 2027 statutory minimum monthly wage (MMA). A higher MMA directly raises the threshold for non-taxable per diem allowances under the 1.65 coefficient rule, as well as the minimum social insurance contribution base ("Sodra floor").

3. Commercial contract price indexation. Due to rising labor and operating expenses, businesses reviewing multi-year service contracts should consider applying indexation clauses linked to the Harmonized Index of Consumer Prices (HICP).

Final parameters will depend on upcoming statutory decisions: the formal assessment by the National Audit Office (acting as the fiscal institution), the Government's decision on the 2027 MMA and minimum hourly wage, and the 2027 draft budget package scheduled for submission to the Seimas by October 17, 2026.