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Political, economic and social stability are important factors to take into account for businesses looking for a solid base from which they can develop. Luxembourg has a high number of assets in this field.

Strong economic performance

Luxembourg has a robust and diversified economy that has been growing steadily over the years, continuously outperforming the EU average. It is one of the three countries with the highest GDP per capita in world – thanks in part to the number of cross-border workers who contribute to its GDP without being counted as part of its population.

Luxembourg ranks as the world’s 12th most competitive economy, in particular due to its international trade, employment, domestic economy, public finance, business legislation, and societal and institutional framework.

Stable, resilient economy

Luxembourg is one of the few countries in the world that are consistently AAA rated by all major credit rating agencies, due to its economic resilience, solid public finances, and robust and transparent institutional framework. When Moody’s introduced environmental, social and governance (ESG) aspects in its assessment methodology, the agency pointed out that Luxembourg has a low exposure to environmental and social risks, high governance performance and a very high capacity to respond to shocks.

Luxembourg ranked 3rd most resilient economy in the world in 2021. This highlights how the country’s healthy economy and institutional stability have helped it successfully weather the economic crisis triggered by the coronavirus pandemic. The strong financial position at the outset of the crisis meant that in spite of the massive support to keep the economy going, and all the investments done in healthcare, Luxembourg still has the 2nd lowest government debt rate in the EU.

Performing labour market

Luxembourg has the 2nd highest labour productivity in the world (The Conference Board Productivity Brief, 2019). Employment creation is impressive: the number of people employed in the country has increased by 54% between 2005 and 2020. The country also ranks 1st in the world for economy and job security (Expat Insider, 2019). The unemployment level is considerably lower than the EU average.

Political and social stability

Luxembourg is well known for its political and regulatory stability and ranks among the 10 most politically stable countries in the world. A parliamentary democracy and constitutional monarchy, it has only had 8 different prime ministers since 1945, often heading coalition governments including several different political parties. This has been instrumental in supporting its ongoing long-term policy approach.

The country has a stable labour environment where open dialogue between business and union representatives is favoured. The number of working days lost through industrial action is among the lowest in Europe.

3rd most resilient economy in the world

(2021 FM Global Resilience Index)

9th most politically stable country in the world

(The World Bank, 2020)

12th most competitive economy in the world

(2021 IMD World Competitiveness Ranking)

GDP growth: +7% (EU +5%)

EU +5%
(2021)

 

Inflation rate: 2.5%

EU 2.4%
(2021)

Unemployment rate: 5.8%

EU 6.7%
(2021)

Public debt: 24.8% of GDP

EU 75.9%
(2021)

Employment growth 2005-2020: 54%

EU 9%

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