Luxembourg has a stable economy due to high income levels, low unemployment and low inflation. The standard of living in Luxembourg is high and globally it is ranked second in terms of GDP per capita.

Luxembourg's economy depends mainly on its banking, steel and industrial sectors. The industrial sector was previously dominated by the steel industry, which has now diversified into rubber and chemical production. The strong growth in the financial sector has stabilized the reduction in steel manufacturing.

(Source: economywatch)

Gross domestic product (GDP)

Source: statistiques.public.lu)

GDP at constant prices was EUR 28.3 billion in 2009. GDP in 2009 decreased from EUR 29.5 billion in 2008.

(Source: statistiques.public.lu)

GDP per capita

Luxembourg's GDP per capita in 2009 was EUR 75,600. The GDP per capita in 2009 decreased from EUR 80,600 in 2008.

 

(Source: statistiques.public.lu)

Gross national income

Luxembourg's GNI per capita PPP was USD 59,550 in 2009 compared to USD 67,050 in 2008.

(Source: World Bank)

Income tax

Income tax on individual incomes in Luxembourg ranges from 0-38%.

(Source: Worldwidetax.com)

Corporate tax

The standard corporate income tax rate in Luxembourg is 21%.

Tax contribution	Statutory tax rate
Corporate income tax	21.8%
Municipal tax	6.8%
Fuel tax	Charged on fuel price
Property tax	750.0%
Net wealth tax	0.5%
Vehicle tax	varies
Tax on insurance contracts	4.0%
Value added tax (VAT)	15.0%

(Source: Worldwidetax.com, doingbusiness)

Inflation rate

Luxembourg experienced high rates of inflation until 2008. However, inflation rates levelled off in 2009. The inflation rate in 2009 decreased to 0.4% from 3.4% in 2008. In addition, the inflation rate is forecasted to be 2.1% in 2010 and 1.6% in 2011.

 

Source: statistiques.public.lu)

FDI Inflow

FDI inflows almost doubled from EUR 70,631 million in 2008 to EUR 140,267million in 2009. The FDI registered in the first three quarters of 2010 was EUR 12,737 million.

(Source: bcl.lu)

Portfolio investment inflow

 

Period (P)	Assets	Liabilities
2010 Q3	-33,179	32,291
2010 Q2	12,132	21,032
2010 Q1	-32,724	42,316
2009 Q4	-68,997	51,605
2009 Q3	-19,948	28,056
2009 Q2	-32,907	6,943
2009 Q1	-167,308	117,295

p - Provisional

(Source: bcl.lu)

 

Banking sector assets

The table below displays the assets of the Central Bank of Luxembourg.

Currency Unit: Euro (EUR)

Assets	2009	2008
Gold and gold receivables	55,490,933	45,352,938
Claims on non-euro area residents denominated in foreign currency	505,915,151	239,317,662
Claims on euro area residents denominated in foreign currency	71,067,245	10,825,738,929
Claims on non-euro area residents denominated in euro	1,601,110,558	2,235,151,662
Lending to euro area credit institutions related to monetary policy operations denominated in euro	15,156,000,000	40,080,417,423
Other claims on euro area credit institutions denominated in euro	1,010,269,125	579,866,874
Securities of euro area residents denominated in euro	3,910,225,687	3,727,912,441
Intra-Eurosystem claims	52,572,646,254	42,167,907,000
Other assets	2,166,316,715	743,367,631
Total assets	77,049,043,144	100,645,076,226

(Source: bcl.lu)

Consumer price index

Base year: 2005 = 100

(Source: statistiques.public.lu)

The annual average consumer price index rose from 109.01 in 2009 to 111.49 in 2010. From Jan 2010 till Jun 2010, the consumer price index showed an increasing trend. CPI dipped marginally from 111.45 in May 2010 to 111.44 in June 2010. The CPI dipped further to 111.07 in July 2010. The CPI increased from August till the end of 2010, to record an annual average CPI of 111.49

(Source: statistiques.public.lu)

Interest rates on saving deposits/time deposits

 

Category	2009 (%)	2008 (%)
Savings deposit rate	0.57	3.45
Mortgage rate	2.33	4.35
Legal interest rate	4.25	5.75

(Source: statistiques.public.lu)

The interest rates offered on savings deposits decreased from 3.45% in 2008 to 0.57% in 2009. The mortgage rates and legal interest rates in 2009 also decreased in comparison to the previous year.

Public debt

 

Items	2009 (EUR million)	2008 (EUR million)
Central government	4,599.9	4,521.6
Foreign debt	31.7	31.1
Local governments	863.8	859.4
Total	5,463.1	5,381.0

(Source: statistiques.public.lu)

Official exchange rate

(Source: Eurostat)

Government finances

Fiscal balance

 

(Source: bcl.lu, statistiques.public.lu)

Government revenue

Category	2009 (EUR million)	2008 (EUR million)
Taxes on Production and Imports	4,492.0	4,634.3
Current Taxes on Income, Wealth, etc.	5,257.5	5,269.2
Social contributions	4,576.3	4,292.0

(Source: statistiques.public.lu)

Luxembourg's total revenue decreased from EUR 15,761.9 million in 2008 to EUR 15,719.6 million in 2009.

Tax revenue

Revenue (EUR million)	2009	2008
Taxes on Production and Imports	4,492	4,634.3
Current Taxes on Income, Wealth, etc.	5,257.5	5,269.2

(Source: statistiques.public.lu)

The taxes on production and imports along with current taxes on income and wealth decreased between 2008 and 2009.

Government expenditure

Items	2009	2008
Gross capital formation	1,345.7	1,276.1
Social benefits	7,808.9	7,108.4
Total	15,997.2	14,628.2

The consolidated estimates of national expenditure in 2009 amounted to EUR 15,997.2 million. The gross capital formation for 2009 was EUR 1,345.7 million compared to EUR 1,276.1 million in 2008, showing a 5.45% increase. Government expenditure on social benefits in 2009 also increased from EUR 7,108.4 million to EUR 7,808.9 million, increasing by 9.85% over a year.

(Source: statistiques.public.lu)

 

Current account balance - surplus/deficit

According to provisional figures released, the current account in the first three quarters of 2010 was EUR 3,144 million. The current account in 2009 was EUR 2,549 million.

Current Account (EUR million)
	2009 (p)	2010 (p) (till third quarter)
Total	2,549	3,144
Goods	-3,059	-2,659
Services	17,804	16,312
Compensation of employees	-6,375	-4,716
Investment income	-4,896	-5,229
Current transfers	-925	-565

p - Provisional

(Source: bcl.lu)

 

Balance of payment (EUR millions)

Items	2009(p)	2010(p) (till 3rd quarter)
Current account	2,549	3,144
Capital account	-271	-140
Financial account	-2,271	-3,668
Errors and omissions	-7	665

(p = provisional)

(Source: bcl.lu)

In 2008 the Labour force in Luxembourg was approximately 220,000. Although employment rose strongly in 2008, the labour market was highly affected by the economic crisis. According to the European Labour Force survey (EU LFS), the employment rate in Luxembourg in 2009 marginally decreased to 217,000 which accounted for 65.2% of the total labour force. This shows a marginal reduction in the employment rate in 2009 compared to 2008.

The labour participation rate of women in Luxembourg in 2008 was 47% of the total female population aged 15 years and older. The labour participation rate of men in 2008 was 63% of the total male population aged 15 years and older.

(Source: World Bank, statistiques.public.lu)

The employment rate in the agriculture sector and industrial sector was as follows:

The above chart indicates that the main portion of the labour force was employed in the industrial sector compared to the agricultural sector. The employment rate in the agricultural sector rose from 5.2 thousand in 2008 to 5.4 thousand in 2009 whereas, the employment rate in industrial sector decreased from 37.7 thousand in 2008 to 36.7 thousand in 2009.

The work force is mainly distributed between financial, real estate, renting and business activities which makes up 101.1 thousand of the work force, while the trade sector employed 90.4 thousand of the work force. The other service activities employed 80.2 thousand of the work force.

(Source: statistiques.public.lu)

Unemployment rate

The registered unemployed population in January 2010 was 15,137 and there were estimated to be 14,703 unemployed people by October 2010.

(e) = estimated

(Source: bcl.lu)

Minimum wage

The minimum wage rate in Luxembourg is EUR 1,757.56, with effect from Jan 2011.

The social minimum wage since July 2010 is:

(Source: statistiques.public.lu, fedee)

Level of unionization

The trade unions in Luxembourg for the private sector are:

• Luxembourg Confederation of Christian Trade Unions (OGB-L): In terms of membership, it is the largest trade union in the country with more than 50,000 members
• Confederation of Christian Unions in Luxembourg (LCGB): It is the second largest trade union in the country compared to the OGB-L with 40,000 members
• White-collar Union Federation (ALEBA/UEP-NGL-SNEP): It is a body formed in 2003 for white-collar employees in the private sector

(Source:fedee)

Luxembourg has a constitutional monarchy as a form of government. His Royal Highness Henri is the Grand Duke of Luxembourg. He succeeded his father the Grand Duke Jean on 7^th October 2000. The government consists of a prime minister, a deputy minister and 13 members known as ministers. The government or executive body is formed by the Grand Duke and the ministers. The ministers and the secretaries of state are appointed by the government to support the Grand Duke in implementing its constitutional powers.

The Chamber of Deputies is the parliament in Luxembourg and it is unicameral in nature. It has 60 statutory members, which includes 12 women at present.  The members are directly elected for a term of five years.

(Source: gouvernement.lu)

The various parties represented in Luxembourg are:

• Christian Social People's Party
• Democratic Party
• Luxembourg Socialist Workers' Party
• The Greens
• Alternative Democratic Reform Party
• The Left

The national elections are held every five years whereas, the municipal elections are held every six years.

Regulatory environment in Luxembourg

Luxembourg has a parliamentary form of government with a constitutional monarchy by inheritance. Luxembourg enjoys a great degree economic prosperity among industrialized democracies.

Luxembourg’s economic freedom score is 76.2, making its economy the 13th freest in the 2011 Index. Luxembourg ranks 4^th out of 43 countries in the European region.

Source: (Heritage.org)

Corruption perception

Luxembourg is ranked 11^th on Corruption Perception Index 2010, which indicates that the corruption levels in the public departments is Limited.

Luxembourg rose in the CPI rankings compared to 2009, it was ranked 12^th with a score of 8.2 which indicates the perceived levels of corruption is decreasing in Luxembourg.

(Source: transparency.org)

Freedom of information

The constitution of Luxembourg guarantees the freedom of information and speech of the media. The print media in Luxembourg are privately owned and therefore reflect the different viewpoints regarding the issues affecting the country.

Luxembourg ranked 14^th in the Press Freedom Index 2010 with a score of 4 points, it indicates that the freedom of the press in Luxembourg is moderate.

(Source: rsf.org)

Newspapers

The various newspapers in Luxembourg include:

• Letzebuerger Journal
• Luxemburger Wort
• Tageblatt

(Source: BBC)

Judicial system

The judiciary in Luxembourg includes:

The Superior Court of Justice: It is at the top of the hierarchy of courts in the Luxembourg’s judiciary. It is located in Luxembourg. It includes two courts which are the Court of Appeal and the Court of Cassation.

The Court Of Appeal: has nine rooms, a bench of five judges and three advisors. It deals with civil, criminal, commercial and correctional cases.

The Court of Cassation:  includes a sitting room with five judges. A barrister or solicitor is required to proceed with all the cases.

The District Courts: There are two district courts, one located in Luxembourg and the other in Diekirch.

Justices of Peace: Luxembourg has three Justices of Peace, each located in Luxembourg, Diekirch and Esch-sur-Alzette respectively.

The other elements of the judicial system are:

• The Administrative tribunal
• The Administrative Court
• The Constitutional Court

 (Source: mj.public.lu)

Population

The estimated population of Luxembourg on 1^st January 2010 was 502,100.  50.3% of the total population were female and the remaining 49.7% were male.

(Source: statistiques.public.lu)

Gender ratio

The gender ratio (men per 100 women) in 2009 was 98.5.

The estimated population by age groups on 1st January 2010 was as follows:

The working age group (15 to 64 years) accounted for 68.3% of the total population in Luxembourg. The age group below 14 years of age made up 17.7% and the age group of 65 years and above was 14%.

(Source: statistiques.public.lu)

Infant mortality

The infant mortality rate (per 1,000 live births) in Luxembourg between 2005-2010 was 4.2.

(Source: UN)

Birth rate

The birth rate in Luxembourg was 11 births per 1000 people in 2009, compared to 12 births per 1000 people in 2008.

(Source: World Bank)

Life expectancy rate

The average life expectancy in Luxembourg is 79.03 years. The life expectancy rate for men in Luxembourg is 76.7 years and for women is 82.1 years.

(Source: UN)

Ethnic groups

Luxembourg's ethnic composition has a large Celtic population base with a blend of French and German people. Other ethnic groups include Portuguese, Italians, French, Belgians, and Germans. Luxembourgian laws forbid the collection of data on religious practices. However, Roman Catholicism is the dominant religion in Luxembourg.

Rural/urban population ratio

In 2007, approximately 82.5% of the population lived in urban areas. Luxembourg’s urban population growth rate between 2005-2010 was 1% whereas, the annual growth rate of the rural population was 1.8%.

(Source: UN, UNDP)

Migration

The mid-year estimates for international migrants in 2010 was 173,232 or 35.2% of the total population.

(Source: UN)

Human development index

Luxembourg ranked 24^th on the Human Development Index (HDI) 2010, conducted by the United Nations. HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income).

(Source: UNDP)

Education

Luxembourg's literacy rate was estimated to be 100%. School education is compulsory in Luxembourg from the age 4 to 16 years. The 12 school years are divided into elementary school and post-primary education.

(Source: men.public.lu)

The following table shows the number of pupils and teachers in various levels of education in 2009.

(Source: statistiques.public.lu)

Health care

Luxembourg has a high standard state-funded compulsory healthcare system. Luxembourg’s Union of Sickness Funds looks after the health service in Luxembourg. Citizens are provided with free and subsidised healthcare with well trained staff. They are entitled to and have the right to choose their doctor, specialist and hospitals. Luxembourg also has a private healthcare system. In 2008, Luxembourg had 480 general practitioners and 1,005 Specialists.

(Source: expatica.lu,statistiques.public.lu)

In 2009, government expenditure on the health sector amounted to EUR 1811.6 million in goods and services and EUR 108.1 million in cash payments. Spending on maternity care amounted to EUR 156.3 million.

Health and maternity insurance

(Source: statistiques.public.lu)

Mass public transit

Luxembourg has reliable and effective road, rail and air transport facilities and services. The main form of public transport used in Luxembourg is primarily buses.

On 1^st January 2010, the length of national network was calculated to be 2,899 km, of which 152 km were motorways.

(Source: statistiques.public.lu)

Railways

(Source: statistiques.public.lu)

Airports

(Source: Air charter world)

Telecommunications networks

Luxembourg had approximately 245,000 fixed telephone line users in 2004 which rose to 263,600 in 2009, registering a CAGR of 1.5%. In 2009, there were 54.22 telephone lines per 100 inhabitants.

(Source: ITU)

The mobile phone subscriptions in 2004 was 470,000 which rose to 720,000 in 2009, recording a CAGR of 8.9%. In 2009, there were 148.09 mobile phone subscriptions per 100 inhabitants.

(Source: ITU)

Internet users

(Source:internetworldstats.com)

The number of internet users in Luxembourg increased from 100,000 in 2000 to 425,500 in 2010.