Luxembourg: Economy Overview

Luxembourg's small, stable, high-income economy - benefiting from its proximity to France, Belgium, and Germany - has historically featured solid growth, low inflation, and low unemployment.

Economy Overview

The industrial sector, initially dominated by steel, has become increasingly diversified to include chemicals, rubber, and other products. Growth in the financial sector, which now accounts for about 28% of GDP, has more than compensated for the decline in steel. Most banks are foreign owned and have extensive foreign dealings. The economy depends on foreign and cross-border workers for about 60% of its labor force. Luxembourg, like all EU members, suffered from the global economic crisis that began in late 2008. Following strong expansion from 2004 to 2007, Luxembourg's economy contracted 0.9% in 2008 and 3.9% in 2009. Nonetheless, the country continues to enjoy an extraordinarily high standard of living - GDP per capita ranks third in the world, after Liechtenstein and Qatar, and is the highest in the EU. Turmoil in the world financial markets and lower global demand during 2008-09 prompted the government to inject capital into the banking sector and implement stimulus measures to boost the economy. Government stimulus measures and support for the banking sector, however, led to a 5% government budget deficit in 2009.

GDP (purchasing power parity):

$39.14 billion (2009 est.)
country comparison to the world: 97
$40.52 billion (2008 est.)
$40.51 billion (2007 est.)
note: data are in 2009 US dollars

GDP (official exchange rate):

$51.74 billion (2009 est.)

GDP - real growth rate:

-3.4% (2009 est.)
country comparison to the world: 170
0% (2008 est.)
6.5% (2007 est.)

GDP - per capita (PPP):

$79,600 (2009 est.)
country comparison to the world: 3
$83,400 (2008 est.)
$84,300 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 0.4%
industry: 13.6%
services: 86% (2007 est.)

Labor force:

205,000 of whom 125,400 are foreign cross-border workers commuting primarily from France, Belgium, and Germany (2009 est.)
country comparison to the world: 167

Labor force - by occupation:

agriculture: 2.2%
industry: 17.2%
services: 80.6% (2007 est.)

Unemployment rate:

5.9% (2009 est.)
country comparison to the world: 52
4.4% (2008 est.)

Investment (gross fixed):

17.4% of GDP (2009 est.)
country comparison to the world: 117

Budget:

revenues: $21.09 billion
expenditures: $21.67 billion (2009 est.)

Inflation rate (consumer prices):

0.4% (2009 est.)
country comparison to the world: 35
3.4% (2008 est.)

Central bank discount rate:

1.75% (31 December 2009)
country comparison to the world: 121
3% (31 December 2008)
note: this is the European Central Bank's rate on the marginal lending facility, which offers overnight credit to banks in the euro area

Stock of domestic credit:

$395.1 billion (31 December 2009 est.)
country comparison to the world: 27
$369.6 billion (31 December 2008 est.)

Agriculture - products:

grapes, barley, oats, potatoes, wheat, fruits; dairy and livestock products

Industries:

banking and financial services, iron and steel, information technology, telecommunications, cargo transportation, food processing, chemicals, metal products, engineering, tires, glass, aluminum, tourism

Industrial production growth rate:

1.7% (2007 est.)
country comparison to the world: 51

Oil - production:

0 bbl/day (2009 est.)
country comparison to the world: 149

Natural gas - production:

0 cu m (2008 est.)
country comparison to the world: 163

Current account balance:

$9.351 billion (2009 est.)
country comparison to the world: 33
$3.176 billion (2008 est.)

Exports:

$14.18 billion (2009 est.)
country comparison to the world: 71
$21.43 trillion (2008 est.)

Exports - commodities:

machinery and equipment, steel products, chemicals, rubber products, glass

Exports - partners:

Germany 19.78%, France 15.87%, Belguim 11.07%, UK 7.96%, Italy 7.49%, Netherlands 4.31% (2009)

Imports:

$18.12 billion (2009 est.)
country comparison to the world: 69
$27.72 billion (2008 est.)

Imports - commodities:

minerals, metals, foodstuffs, quality consumer goods

Imports - partners:

Belgium 27.22%, Germany 23.14%, China 18.62%, France 8.85%, Netherlands 5.06% (2009)

Debt - external:

$1.994 trillion (30 June 2009)
country comparison to the world: 9
$2.02 trillion (31 December 2008)

Stock of direct foreign investment - at home:

$NA (31 December 2009 est.)
$11.21 billion (31 December 2008 est.)

Stock of direct foreign investment - abroad:

$NA 

Exchange rates:

Source: CIA - The World Factbook