Lithuania’s construction industry is seen contracting by 3.5% this year, amid a high base effect, coupled with an increase in overall inflation and construction costs, high interest rates and drop in exports. This is according to a new report by ResearchAndMarkets.com.
A decline in investor and consumer confidence is expected to affect new building investments and housing demands, which lead to decrease in construction activities, the report titled “Lithuania Construction Market Size, Trends and Forecasts 2024-2028” said.
In 2023, the total number of dwellings for which permits were granted fell by 30.5% YoY, preceded by an annual decline of 13.6% in 2022, Oficialiosios Statistikos Portalas (OSP) data showed. Moreover, the total floor area of the building started decreased by 22.7% last year on an annual basis. By sectors, it dropped by 30.9% YoY for residential buildings, and 14% for non-residential buildings. Furthermore, the total value of construction work done within the country for both residential building and non-residential building declined by 11.3% YoY and 10.2% YoY respectively in 2023.
The construction industry in Lithuania witnessed an annual growth of 9.8% in real terms in 2023 while the average construction inputs price index grew by 5% year on year, the report noted.
Looking ahead, the Lithuanian construction industry is expected to register an average growth of 3.5% from 2025 to 2028, supported by investments in energy, transport, housing and the industrial construction projects, the report by ResearchAndMarkets predicts. The Baltic country aims to develop 1GW of onshore wind power capacity and 1GW of solar power capacity by 2025 and install wind turbines with a total capacity of 4.5GW in Lithuanian waters by 2028.
In January 2024, Lithuania’s National Energy Regulatory Council (NERC) launched a tender for the second offshore wind project in the Baltic Sea near Palanga. With an installed capacity of 700MW, the project is expected to be completed by 2028. Previously, in November 2023, Ignitis Renewables a local energy company reported that it is conducting a geophysical survey to find the location for the development of an offshore wind farm project in the Baltic Sea. The project includes the construction of a 700MW offshore wind farm by 2030, which will be equipped to generate 3TWh of electricity annually. Moreover, in March 2024, the Nordic Investment Bank (NIB) and LT Energija a local energy company signed a loan agreement worth EUR100 million ($108.2 million) to construct a wind farm project in Pagegiai. The project includes the construction of a 264MW wind farm with a total cost of EUR460 million ($487.6 million) by 2026.
In April 2024, compared to March, the Construction Input Materials and Articles Price Index increased by 0.02 per cent. Over the year (April 2024, compared to April 2023), the Construction Input Materials and Articles Price Index decreased by 2.7 per cent, OSP said.
