Luxembourg, is a perfect example of a stable economy, characterized by high income, low unemployment, low inflation, and high growth. The industrial sector, once dominated by steel has now diversified into rubber and chemicals. Growth in the financial sector has been phenomenal and currently contributes 28% towards GDP (gross domestic product). This unprecedented growth in the financial sector has compensated the decline in steel manufacturing. Majority of the banks in Luxembourg are foreign owned and have significant overseas transactions. Agriculture which accounts for only 1% of this country’s GDP is primarily based on family-owned farms. The standard of living in Luxembourg is among the highest in the world, and its per capita GDP is ranked second globally.
Economic activities of Luxembourg
Services sector accounts for nearly 86% of GDP. The key activities in services sector include banking and financial services, tourism, information technology, and transport and communication.
Secondary industries contribute about 13% towards GDP. Iron and steel, aluminum extraction, chemicals, engineering equipments, glass, rubber and metal products are the main constitute the main manufacturing industries in Luxembourg. Of these engineering equipments, chemicals, iron and steel products, glass, and rubber goods are exported.
Agricultural sector’s contribution to GDP amounts to 1%. Grapes, fruits, potatoes, oats, barley, and wheat are the crops grown in Luxembourg. Wine manufacturing, dairy produce and livestock products are the principal primary industries.
Luxembourg imports consumer goods, food items, metals and minerals. Countries trading with Luxembourg include France, Germany, Belgium, Netherlands, Spain, U.K., Italy, and China.
Important economic parameters of Luxembourg
The following data are vital indicators of Luxembourg’s economy:
- GDP based on purchasing power parity (ppp) – US $38.14 billion
- GDP based on official exchange rate – US $50.16 billion
- Per capita GDP (ppp) – US $79,400
- Real growth rate of GDP – 4.5%
- Gross fixed investment – 20.2% of GDP
- Total revenue – US $19.78 billion
- Total expenditure – US $18.9 billion
- Export earnings – US $18.42 billion f.o.b. (free on board)
- Import expenditure – US $23.13 billion f.o.b.
- Electricity consumption – 6.315 billion kWh*
- Oil consumption – 64,020 bbl (billion barrels) per day*
- Currency – Euro
All figures are based on 2007 estimates except those marked with * which are as per estimates of 2005.