Luxembourg Economic Review
Introduction
General Data
|
Population |
455,000 |
|
Population Growth Rate |
1.25% |
|
Religions |
Predominantly Roman Catholic with very few Protestants, Jews, Muslims |
|
Government System |
Constitutional Monarchy |
Luxembourg, the smallest member-nation of the European Union, is situated between France, Germany, and Belgium in the heart of Europe. Boasting the EU’s highest standards of living and a record of steady economic growth since 1985, Luxembourg’s economy presents a prosperous and diversified business climate. While growth rates have slowed in the last couple of years, the Luxembourg economy continues to outperform its neighbours. The government is pro-business.
Though the iron and steel sectors were pivotal in Luxembourg’s phenomenal economic growth in the 1950s, 1960s and 1970s, the country has undergone major restructuring in the past two decades. As a result, it is now one of the world’s biggest financial centres and sophisticated service-oriented economies.
Luxembourg maintains five thriving sectors including financial services, cargo shipping, steel, satellite transmission, and television and radio broadcasting. A favourable tax environment and bank-privacy legislation have enabled the financial services sector, specifically banking and insurance, to become Luxembourg’s growth leader. Home to 175 banks, Luxembourg holds the highest banking concentration in the European Union. The government is also highly supportive of diversification into the high tech, information and communications industries. To that end, it promotes increasing access to and use of the Internet and is committed to developing the requisite infrastructure. With its comparatively low VAT rates
(15%), Luxembourg has begun to attract businesses that deliver services electronically.
Economic Outlook
Major Figures
|
|
2001 |
2002 |
2003 |
2004 |
2005 |
|
Gross Domestic Product |
22,019,800,000 |
22,805,500,000 |
23,955,900,000 |
25,663,500,000 |
27,150,000,000 |
|
GDP Real Growth Rate |
1.5% |
2.5% |
2.9% |
2.3% |
4.5% |
|
GDP per capita |
50,159 |
51,358 |
53,437 |
56,828 |
59,670 |
|
Inflation |
2.6% |
2.1% |
2% |
2.2% |
2.5% |
|
Unemployment |
2.6% |
3% |
3.7% |
4.2% |
4.7% |
In the period of 1985-2000, Luxembourg’s GDP has grown an average of 6 % per year while its inflation and unemployment rates have remained characteristically low. However, the burst of the stock-market bubble has affected Luxembourg’s financial services sector-dominated economy. Unemployment also rose from 3.7 in 2003 to 4.2 % in 2004, but still substantially below EU average. The Government of Luxembourg forecast a GDP real growth of 4.5% for 2005.
Investment Incentives
Since the end of World War II, Luxembourg has undertaken measures to attract foreign investment from both large multinationals and smaller companies. The government offers incentives, including tax rebates and credit assistance, to foreign investors desiring to set up subsidiaries in Luxembourg. Financial support may take the form of capital grants or medium and long-term loans privy to favourable conditions by the National Credit and Investment Corporation.
To reduce its reliance on financial services sector, the government of Luxembourg is looking to attract foreign investment in a range of fields, including information technology and research. Additionally, Luxembourg offers investors an extensive infrastructure network, a tailor-made investment incentive program, easy access to its government’s decision markers, and a stable political and economic environment.
The government also dedicates public funds to the development of industrial parks for investors through its industrial zone program. The government can make premium land in one of the ten national industrial parks available for this purpose.
International Trade
General Figures
Million EUR |
2002 |
2003 |
2004 |
2005 |
Export |
9,005.3 |
8,845.8 |
9,783.6 |
8,634 |
|
Import |
12,276.0 |
12,076.3 |
13,460.8 |
10,611 |
|
Balance |
-3,270.7 |
-3,230.6 |
-3,677.2 |
-1977 |
Luxembourg conducts the majority of its trade with EU-countries, in particular with its immediate neighbours France, Belgium and Germany.
Israel-Luxembourg Trade Relations
The trade balance between Israel and Belgium shows a surplus of $ 19.6 million in favour of Luxembourg in 2005. Israeli exports to Luxembourg reached $ 10.9 million while Israeli imports from Luxembourg reached $ 30.5 million. Those figures represent respectively an annual increase of 26.7 % on the side of the exports and an annual decrease of 45.2% on the side of the imports. Exchanges between Luxembourg and Israel stay low.
The most important sector regarding Israeli exports to Luxembourg is machinery, electrical equipment, image and sound recorders, and their parts (46.7%). The other sectors, part of the Israeli exports to Luxembourg, are: plastic, rubber and articles thereof; base metals and article thereof.
The most important sectors regarding Israeli imports from Luxembourg are:
- Machinery, electrical equipment, image and sound recorders, and their parts (30.2% )
- Base metals & articles thereof (28.5%)
- Prepared foodstuffs, beverage, tobacco (25.6%)
Some of the Israeli biggest banks have subsidiaries in Luxembourg including Bank Hapoalim and Bank Leumi.
Two leading financial institutions from Luxembourg invested in the Israeli Millenium Materials Technologies Funds (MMT Funds). The SNCI (Société Nationale de Credit et d’Investissment ) invested Eur 1 million and BGL Investment Partners invested Eur 2 million.
An agreement on the avoidance of double taxation was signed between Israel and Luxembourg on December 13th 2004.
Website links in Luxembourg
· General portal
www.luxembourg.lu
· Government portal
www.gouvernement.lu
· Central Service for Statistics & Economic Studies
www.statec.lu
· Ministry of Economy & Foreign Trade
www.eco.public.lu
· Chamber of Commerce
www.cc.lu
· Phone Directory
www.allo.lu
· Luxembourg portal for Innovation and Research
www.innovation.public.lu
Luxembourg directory for Trade and Industry
www.abc-d.lu
· Association of the Luxembourg Fund Industry
www.alfi.lu
· Central Bank of Luxembourg
www.bcl.lu
· Luxembourg Financial portal
http://finance.luxweb.com
News – Local Publications
Daily
· Letzebuerger Journal ( German)
www.journal.lu
· Luxemburger Wort ( German, with some French)
www.wort.lu
· Tageblatt ( German)
www.tageblaat.lu
Weekly
· Le Jeudi ( French)
www.le-jeudi.lu
· Letzebuerger Land ( German/French)
www.land.lu
Monthly
· Agefi ( French business/finance journal)
www.agefi.lu
Echo d’Industrie (French business journal)
Trade Event
|
Name |
Date |
Place |
Organizer |
Med-e-Tel
International trade event and conference for eHealth, Telemedicine and Health ICT |
5th – 7th April 2006 |
Luxexpo
www.luxexpo.lu
|
Luxexpo
www.medetel.lu
|
Expo Tech
Trade fair for the process industry |
21th April 2006 |
Luxexpo
www.luxexpo.lu
|
Fairtec
www.fairtec.com
www.expotech.lu
|
Oekofoire
Environmental fair for man, nature and technology
|
15th – 17th September 2006 |
Luxexpo
www.luxexpo.lu
|
Mouvement Ecologique
Luxexpo |
Software & IT Solutions
Software applications, systems & development software, Internet & e-business solutions and services |
4th – 5th October 2006 |
Luxexpo
www.luxexpo.lu |
Kortrijk Xpo
www.siexpo.lu
|
Expo Gast
International trade fair for gastronomy |
18th – 22 th November
2006 |
Luxexpo
www.luxexpo.lu
|
|