Lithuania had a primarily agricultural economy before the USSR annexed the country in 1940. In the next 50 years the USSR fully integrated Lithuania into the Soviet system. The Soviets abolished private ownership in agriculture, replacing it with collective or state farms. They also forced rapid urbanization by relocating workers from other parts of the USSR to Lithuania, where they built massive factories to produce industrial goods for the entire Soviet bloc. The rapid reorientation of trade relationships following independence in 1991 sent the Lithuania economy into depression. The gross domestic product (GDP), which measures the value of all goods and services, decreased sharply every year until 1994. Price deregulation and higher costs for imported energy produced massive inflation. Yet by the mid-1990s, Lithuania ranked among the better performing economies of those transitioning from the old Soviet system to a free market.
Lithuania possesses a good range of useful mineral resources, including sulfates, notably gypsum; chalk and chalky marl; limestones; dolomites; various clays, sands, and gravels; peat; some iron ore and phosphorites; and mineral waters. Oil deposits have been detected in the offshore regions. The power potential of the many rivers and the traditional resources of the great forests and the rich agricultural areas have added to the basic wealth of the nation, which is well placed geographically for trade purposes. Amber, which is a fossil tree resin, is found along the shore of the Baltic Sea.
Lithuania, the Baltic state that has conducted the most trade with Russia, has been slowly rebounding from the 1998 Russian financial crisis. High unemployment and weak consumption have held back recovery. GDP growth for 2000 - estimated at 2.9% - fell behind that of Estonia and Latvia, and unemployment is estimated at 10.8%, the country's highest since regaining independence in 1990. For 2001, Lithuanians forecast 3.2% growth, 1.8% inflation, and a fiscal deficit of 3.3%. In early 2001, the Lithuanian Government announced that it will repeg its currency, the litas, to the euro (the litas is currently pegged to the dollar) some time in 2002. Lithuania must ratify 25 agreements along with other legal documents and obligations by 1 May 2001 before gaining World Trade Organization membership. Lithuania was invited to the Helsinki summit in December 1999 and began EU accession talks in early 2000. Privatization of the large, state-owned utilities, particularly in the energy sector, remains a key challenge for 2001.
