Germany’s manufacturing output is forecast to decline in November and remain only 3.7% above levels seen during the peak of the Covid-19 crisis, raising concern for Lithuania’s export-driven industrial base, Verslo Žinios reported on October 21, citing data from Germany’s IFO and Destatis institutes.

Lithuania’s economy remains highly sensitive to Germany’s industrial cycle — both directly, as an export market, and indirectly, through European supply chains. Germany is Lithuania’s third-largest trade partner, accounting for around 12% of exports of Lithuanian-origin goods and 12.4% of total imports in 2024, according to Statistics Lithuania and Eurostat.

Citadele Bank economist Aleksandras Izgorodinas told Verslo Žinios that while Lithuania’s manufacturing output grew 4% in August, it is projected to rise by only 0.11% in November, based on the bank’s modelling. He said the slowdown in Germany could ripple through Lithuanian production networks, given the two economies’ close integration.

“Germany is a major export market for Lithuania, accounting for about 12% of total exports of Lithuanian-origin goods,” Izgorodinas said. “But Germany’s influence on Lithuania is even greater indirectly, through supply chains.”

Eglė Stonkutė of the Lithuanian Confederation of Industrialists said the contraction in German manufacturing is already being felt by Lithuanian producers, particularly in engineering and intermediate-goods supply.

Artea Bank chief economist Indrė Genytė-Pikčienė told Verslo Žinios that “fundamental economic activities,” including manufacturing, are expanding “very modestly” in Lithuania, adding that recovery will depend on the sector’s ability to adapt by finding new export niches and developing new branches of production.

Bilateral trade remains significant but uneven. Lithuania’s imports from Germany stood at about €6.16bn in 2023, up slightly from 2022, while exports rose from €3.09bn in 2023 to €3.21bn in 2024, according to Eurostat. However, Lithuania’s total exports fell 8% year-on-year in 2023, largely due to lower re-exports and a drop in chemical and fertiliser prices.

The European Commission and Eurostat note that Germany’s industrial downturn is part of a broader EU manufacturing slowdown, which has weakened demand for intermediate goods from smaller economies such as Lithuania, the Czech Republic and Slovakia.

Economists warn that unless Germany’s output stabilises, Lithuania’s manufacturing sector — already facing tight margins and subdued export orders — could see growth stagnate through late 2025 despite local policy support for industrial diversification.