Lithuania has experienced strong convergence since the mid-1990s, but the catch-up of productivity with Western Europe has stalled in the last three years. While a cyclical upswing is likely to lift growth to 3.2 percent this year and next, structural reforms are essential to support strong medium-term performance. The government that took office in December is committed to a “social market economy,” but its reform agenda may be difficult to implement without greater focus on key measures.
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