Economic trends
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 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 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.
International trade
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.
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