The transportation infrastructure inherited from the Soviet period is adequate and has been generally well maintained since independence. Lithuania has one ice-free seaport with ferry services to German, Swedish, and Danish ports. There are operating commercial airports with scheduled international services at Vilnius, Kaunas, and Klaipeda. The road system is good. Border facilities at checkpoints with Poland were significantly improved by using EU funds. Telecommunications have improved greatly since independence as a result of heavy investment. The national telecommunications company had a monopoly on the market until the end of 2002, but now several cell phone companies provide competition.

The economy of independent Lithuania had a slow start, as the process of privatization and the development of new companies slowly moved the country from a command economy toward the free market. By 1998, the economy had survived the early years of uncertainty and several setbacks, including a banking crisis, and seemed poised for solid growth. However, the collapse of the Russian ruble in August 1998 shocked the economy into negative growth and forced the reorientation of trade from Russia toward the West. Since the ruble crisis, the focus of Lithuania's export markets has shifted from East to West. In 1997, exports to former Soviet states were 45% of total Lithuanian exports. In 2005, exports to the East (the Commonwealth of Independent States--CIS) were only 18% of the total, while exports to the EU-25 were 65%. The government of 1999, which was led by Prime Minister Kubilius, managed to control raging budget deficits in the midst of the crisis, and all successor governments have maintained that fiscal discipline.

The last couple of years have been good for the Lithuanian economy. In 2005, Lithuaniaís GDP increased 7.5%, above expectations. Private consumption has been the principal driver of recent economic growth. The contribution of domestic market oriented sectors, especially construction, has also increased. Growth in 2005 was strongest in construction, retail and wholesale trade, and processing and light industries. Inflation was moderate, GDP growth was strong, and the governmentís budget deficit stood at 1.2% of GDP in 2005. Lithuania continues to harmonize its regulatory environment with European Union requirements. Weaknesses remain in public policy development and structural and agricultural reforms. Lithuania pegged its national currency, the litas, to the euro on February 2, 2002 at the rate of LTL 3.4528 for EUR 1. The government hopes to join the single European currency zone on January 1, 2007, but its current inflation rate may reach or exceed the limit, forcing the government to postpone entry.

Lithuania has privatized nearly all formerly state-owned enterprises. More than 70% of the economyís output is generated by the private sector. The share of employees in the private sector exceeds 72%. The Government of Lithuania completed banking sector privatization in 2001, with 89% of this sector controlled by foreign--mainly Scandinavian--capital. The government completed privatization of the national gas and power companies "Lietuvos Dujos" (Lithuanian Gas) and ìVakaru skirstomieji tinklaiî (Western electricity distributor). ìRytu skirtomieji tinklaiî (Eastern electricity distributor), "Lietuvos Energija" (Lithuanian Energy), and "Lithuanian Railways" remain state-owned.

Inflation reached 2.7% in 2005. The minimum wage increased in 2005 to $198 per month, slightly above the poverty threshold. The average wage stands at $464 per month.

Exports to the United States make up 4.7% of all Lithuania's exports, and imports from the United States comprise 2% of total imports to Lithuania. Lithuania has accumulated foreign direct investment (FDI) of $6.8 billion. The stock of U.S. investments amounted to $300 million at the end of 2005, accounting for 5% of FDI. The current account deficit in 2005 stood at 7% of GDP.