Economic trends
Luxembourg’s economy is characterized by an attractive taxation system and a high degree of international openness. It is a country where the level of the service sector is highly expanded (almost 85% of the GDP). The financial sector alone represents almost half of Luxembourg's total GDP, which made it very vulnerable to the crisis. During the last recent years, the country was obtaining an average growth rate of around 5% per year; however in 2008, Luxembourg went into recession right after the financial crisis. In 2009, its growth was stabilized. Unemployment started rising again after a drop in 2007, and in 2009, the rate was over 6% of the active population. In addition to this, the public debt climbed to 15% of the GDP. Lastly, after an increase of 3.4% in 2008, inflation has slightly slowed down in 2009. Luxembourg has the highest GDP per capita in the European Union. The competitiveness of Luxembourg's companies is also one of the highest in the world.
In 2011, the country expects a growth of around 3% and its budget remains on a very rigorous policy which controls public expenditures. This budget should allow the country to rapidly recover its economy, which, in spite of all, is still very dependent of the global economy.
Main branches 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 these recent years, this trend was diversified, 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, this merger has converted it into the world’s biggest steel producer), has its headquarters in Luxembourg.
Like all developed countries, a large part of the GDP is attributed to the tertiary sector. This sector represents almost 84% of the national wealth, and more than half of it, is attributed exclusively to financial and real estate services. Luxembourg is one of the world's largest money markets and the second largest investment fund manager in the world.
International trade
Luxembourg performs almost 90% of its foreign trade with the EU countries. Luxembourg offers a favorable climate to foreign investment. The share of foreign trade in the country’s GDP is around 300%. The trade deficit remains 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.
Luxembourg has accomplished a diversification of its exports outside the European Union and the country currently has trade relations with Asian and Middle Eastern countries. The country has a trade balance surplus and this comes from its high value-added exports.
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Last updates: February 2012
