Luxembourg

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Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of general economic information | Political outline

Economic indicators

Luxembourg’s economy is charaterized by an attractive taxation system and a high degree of international openness. It is a country where the level of expansion of the service sector is very high (almost 85% of the GDP). Alone, the financial sector represents almost half of Luxembourg's total GDP, which made it very vulnerable to the crisis. While it was counting on a growth rate of around 5% per year in these past years, Luxembourg went into recession in 2008 right after the financial crisis. Growth stabilized in 2009. Unemployment started rising again after falling in 2007, and in 2009, the rate was over 6% of the active population. Additionally, public debt climbed to 15% of the GDP. Lastly, after an increase of 3.4% in 2008, inflation slowed down slightly in 2009.
Luxembourg has the highest per capita GDP in Europe. The competitiveness of Luxembourg companies is also one of the highest in the world.

Main indicators	2006	2007	2008	2009	2010
GDP (billions USD)	42.59	49.72e	54.97	46.51	47.04e
GDP (constant prices, annual % change)	6.4	5.2e	0.7	-4.8	0.2
GDP per capita (USD)	90,106	103,591	113,044e	94,418e	94,180e
General government balance (in % of GDP)	1.3	3.2e	1.4e	-3.4e	4.4
Inflation rate (%)	2.7	2.3	3.4e	0.2	1.8e
Unemployment rate (% of the labor force)	4.5	4.4	4.4	6.8	6.0
Current Account (billions USD)	4.45	4.89	4.98	3.53e	3.29e
Current Account (in % of GDP)	10.4	9.8e	9.1e	7.6e	7.0

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Main sectors of industry

The agricultural sector is not well developed. It contributes only 0.4% to the GDP and employs less than 1.5% of the active population. The country's main crops are wine, wood, cereals and potatoes.
The industrial sector (15% of the GDP), has historically been dominated by the production of iron and steel. In recent years, the trend has rather been for diversification, thus chemical factories, plastic products and light engineering have been added. The steel industry contributes around 10% to the GDP. Arcelor (recently acquired by the Mittal Steel group, the merger thus making it the world’s biggest steel producer), has its headquarteres in Luxembourg.
Like all developed countries, a large part of the GDP is attributed to the tertiary sector. This sector represents 84% of the national wealth, and more than half is attributed exclusively to financial and real estate services. Luxembourg is one of the world's largest money markets and the second largest investment funds manager in the world.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Employment by sector (in % of total employment)	1.2	20.9	77.9
Value added (in % of GDP)	0.4	14.4	85.2
Value added (annual % change)	-0.1	2.0	5.2

Source: World Bank - last available data.

Monetary indicators	2004	2005	2006	2007	2008
Euro (EUR) - Average annual exchange rate for 1 USD	0.81	0.80	0.80	0.73	0.68

Source: World Bank - World Development Indicators

Indicator of economic freedom

Score:: 75.2/100
Position:: mostly free
World Rank:: 15 out of 179
Regional Rank:: 8 out of 44

Distribution of Economic freedom in the world
Source: 2008 Index of Economic freedom, Heritage Foundation

Country risk

See the country risk analysis provided by Ducroire.

Foreign trade in figures

Luxembourg does almost 90% of its foreign trade with EU countries. Luxembourg offers a favorable climate to foreign investment. The share of foreign trade in the country’s GDP is around 275%. The trade deficit is a constant in Luxembourg's current economy. The country's three main trade partners (both for imports & exports) are: Germany, France and Belgium. Luxembourg mainly exports iron & steel, electric and electronic equipment, machinery and plastics. The country's main imports are mineral fuels & oil, vehicles, electric & electronic equipment, machinery, iron and steel.

Foreign trade indicators	2004	2005	2006	2007	2008
Imports of goods (millions USD)	17,078	18,802	20,795	23,066	27,729
Exports of goods (millions USD)	13,526	14,602	16,383	18,256	21,431
Imports of services (millions USD)	20,940	24,594	30,218	37,453	40,709
Exports of services (millions USD)	33,957	40,842	50,906	64,524	69,294
Imports of goods and services (annual % change)	9.6	6.1	7.2	5.4	-
Exports of goods and services (annual % change)	9.8	6.3	9.6	5.5	-
Imports of goods and services (in % of GDP)	126.5	133.0	136.4	141.9	-
Exports of goods and services (in % of GDP)	148.5	156.1	166.1	172.5	-
Trade Balance (millions USD)	-3,552	-4,200	-4,411	-4,810	-6,298
Trade Balance (including service) (millions USD)	9,465	12,047	16,276	22,261	22,286
Foreign trade (in % of GDP)	275.0	289.1	302.5	314.4	-

Source: World Bank

Main partner countries

Main customers (% of exports)	2007
Germany	25.7%
France	16.8%
Belgium	12.5%
Netherlands	5.4%
Italy	5.3%
United Kingdom	4.7%
Spain	3.5%
United States	2.5%
Poland	1.6%
Austria	1.6%
China	1.6%
Sweden	1.4%
Russia	1.2%
Switzerland	1.2%
Turkey	1.1%
Czech Republic	1.0%
Denmark	1.0%
Portugal	0.7%
Hungary	0.6%
Finland	0.5%
See more countries	34.3%

Main suppliers (% of imports)	2007
Belgium	32.3%
Germany	27.2%
France	11.7%
Netherlands	6.2%
United States	3.8%
Italy	2.2%
United Kingdom	1.7%
Spain	1.0%
Canada	0.9%
Austria	0.8%
Hong Kong	0.7%
Sweden	0.7%
Poland	0.7%
Switzerland	0.6%
China	0.5%
Japan	0.5%
Ireland	0.5%
Czech Republic	0.5%
Finland	0.3%
Turkey	0.2%
See more countries	18.8%

Source: Comtrade

Main products

Main exports (% of exports)	2007
Iron and steelIron and steel	19.8%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	10.4%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	9.1%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	6.7%
Articles of iron or steelArticles of iron or steel	6.7%
Plastics and articles thereofPlastics and articles thereof	6.1%
Aluminium and articles thereofAluminium and articles thereof	4.7%
Rubber and articles thereofRubber and articles thereof	4.0%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	3.2%
Glass and glasswareGlass and glassware	2.3%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	1.9%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	1.8%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	1.7%
Copper and articles thereofCopper and articles thereof	1.3%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	1.2%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	1.1%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	1.0%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.9%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	0.8%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.8%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	0.8%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.8%
Beverages, spirits and vinegarBeverages, spirits and vinegar	0.6%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.6%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.5%
Miscellaneous chemical productsMiscellaneous chemical products	0.5%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.5%
Pharmaceutical productsPharmaceutical products	0.5%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.4%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.4%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.4%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.4%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.3%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.2%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.2%
Man-made filamentsMan-made filaments	0.2%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.2%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.2%
Ores, slag and ashOres, slag and ash	0.2%
Live animalsLive animals	0.2%
Meat and edible meat offalMeat and edible meat offal	0.2%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.2%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.1%
Organic chemicalsOrganic chemicals	0.1%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.1%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.1%
CerealsCereals	0.1%
See more products	47.3%

Main imports (% of imports)	2007
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	11.9%
Iron and steelIron and steel	10.3%
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	9.2%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	8.8%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	6.9%
Plastics and articles thereofPlastics and articles thereof	4.0%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	3.6%
Aluminium and articles thereofAluminium and articles thereof	3.0%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	2.1%
Rubber and articles thereofRubber and articles thereof	2.0%
Articles of iron or steelArticles of iron or steel	2.0%
Pharmaceutical productsPharmaceutical products	1.7%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	1.7%
Beverages, spirits and vinegarBeverages, spirits and vinegar	1.5%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	1.4%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	1.2%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	1.1%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	1.1%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	1.0%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.8%
Man-made filamentsMan-made filaments	0.8%
Miscellaneous chemical productsMiscellaneous chemical products	0.8%
Organic chemicalsOrganic chemicals	0.8%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.8%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.7%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.7%
Meat and edible meat offalMeat and edible meat offal	0.6%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.6%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.6%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.6%
Glass and glasswareGlass and glassware	0.6%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.5%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.5%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.5%
Copper and articles thereofCopper and articles thereof	0.5%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.5%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.4%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.4%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	0.4%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.4%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.4%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	0.4%
Ceramic productsCeramic products	0.3%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.3%
Fish and crustaceans, molluscs and other aquatic...Fish and crustaceans, molluscs and other aquatic invertebrates	0.3%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.3%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.3%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.3%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.2%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.2%
Works of art, collectors' pieces and antiquesWorks of art, collectors' pieces and antiques	0.2%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.2%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.2%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.2%
Zinc and articles thereofZinc and articles thereof	0.2%
FertilizersFertilizers	0.2%
Railway or tramway locomotives, rolling-stock and...Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds	0.2%
Live trees and other plants; bulbs, roots and the...Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage	0.2%
Sugars and sugar confectionerySugars and sugar confectionery	0.1%
CerealsCereals	0.1%
Clocks and watches and parts thereofClocks and watches and parts thereof	0.1%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.1%
Photographic or cinematographic goodsPhotographic or cinematographic goods	0.1%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.1%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.1%
See more products	52.9%

Source: Comtrade

See more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of general economic information

Ministries: Ministry of Economy
Ministry of Finances
Statistical Office: The National Statistical Institute of Luxembourg
Central Bank: Central Bank of Luxembourg
Stock Exchange: Luxembourg Stock Exchange
Search Engines
Economic portals: Economic Portal (in french)

Political outline

Executive Power: The chief of the state is the Grand Duke. The monarch is hereditary. Following popular parliamentary elections, the leader of the majority party or the leader of the majority coalition is appointed as Prime Minister by the monarch to serve a five-year term. Prime Minister is the head of the government and enjoys the executive powers which include implementing of the law and running the day-to-day affairs of the country. The Council of Ministers (cabinet) is recommended by the Prime Minister and appointed by the monarch.
Legislative Power: Luxembourg has a unicameral legislature. The parliament consists of Chamber of Deputies which has 60 seats; its members are elected by direct popular vote to serve five-year terms. There also exists a second body called Council of State appointed by the Grand Duke (composed of 21 ordinary citizens recommended by the Prime Minister) which advises the Chamber of Deputies in the drafting of legislation. Grande Duke has constitutional power to dissolve the parliament and reinstate a new one. Prime Minister can only recommend the dissolution of parliament to Grande Duke. Legislative power is vested in both the government and the parliament. The people of Luxembourg enjoy considerable political rights.
Main political parties: Luxembourg has a multi-party system. No one party has a chance of gaining power alone, and parties work with each other to form coalition governments. Some of the major political parties in the country are:
-ADR (Alternative Democratic Reform Party) – a conservative nationalist party with anti-Euro ideology;
- CSV (Christian Social People's Party) – a Christian democratic conservative party with pro-Euro ideology;
- KPL or PCL (Communist Party of Luxembourg) – follows communist ideology;
- DP (Democratic Party) – follows liberal political ideology;
- LSAP (Luxembourg Socialist Workers' Party) – social democrats The Greens – supports environmentalism and sustainable society.
Current political leaders: Grand Duke: HENRI (since October 2000) - hereditary
Prime Minister: Jean-Claude JUNCKER (since January 1995) - CSV, heading a coalition government with LSAP
Next election dates: Municipal elections : October 2011

Indicator of freedom of the press

World Rank:: 2/173
Evolution:: 2 places down compared to 2007

Indicator of political freedom

Ranking:: Free
Political freedom:: 1/7
Civil liberties:: 1/7

Map of freedom 2007
Source: Freedom House

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