Luxembourg Economy Facts

by ebizdir · Published January 30, 2023 · Updated February 22, 2023

Economical overview

Luxembourg is one of the world’s richest countries, per capita. Prosperity was built up by a successful industry, but today rests mainly on the strong banking and financial sectors. Several major global corporations also have their domicile in the country.

Different ways of calculating sometimes give different results, but Luxembourg is often at the absolute top, as the individual country in the world where the gross domestic product (GDP) per capita is the highest. In addition, from the beginning of the 1990s, the country has moved away, from just over double GDP per person compared to the rest of the EU, to three times the EU average in 2016. Luxembourg also ranks among the top countries in terms of quality of life measurements for residents. The economy is characterized by steady growth, low inflation and low unemployment.

Countryaah.com: Major imports by Luxembourg, covering a full list of top products imported by the country and trade value for each product category.

During the post-war period, the dependence on the traditional industry, especially the steel industry, gradually decreased while the financial and service sectors instead grew very strong. Political and economic stability, as well as liberal financial legislation, have helped to make Luxembourg a center for international financial transactions. A large part of European credit operations are conducted from here.

It has long been a conscious policy on the part of the government to facilitate the establishment of foreign banks. Nearly 150 banks from a large number of countries have operations in Luxembourg, as well as thousands of other companies in the sector.

Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including LUX which represents the country of Luxembourg. Check findjobdescriptions to learn more about Luxembourg.

Financial operations play a crucial role for tax revenue and the balance of payments. The financial sector accounts for around half of GDP. The service sector as a whole amounts to about 87 percent, which is a high figure even in comparison with the spirit of industrialized countries.

World-leading companies such as the steel manufacturer Arcelor-Mittal, the satellite operator SES and the media group RTL (see also Industry) also have their headquarters in Luxembourg.

Growth is generally above average for EU countries. The global financial crisis also led to a downturn here in 2009, but the country quickly recovered from the recession and growth recovered even before the end of the year. The industry was hit harder than the financial sector.

Warnings have long been made that the dependence on the financial sector is too great. Developments in the EU towards deeper economic integration between member states and abolished financial services restrictions may undermine Luxembourg’s privileged position as a financial center (see Modern History). It is therefore a political ambition that the country continues to broaden its economic activities.