Business and Economy

The economic performance of the Grand Duchy was among the best in Europe during the second half of the 20th century. Luxembourg owes its wealth to the discovery of iron ore in the southern area of the country called the “Minett”. Today, the vibrant expansion of the financial centre, the emergence of new service activities and the leading-edge industrial companies characterize Luxembourg’s economy. This economy is also distinguished by a calm and peaceful social climate.

Agriculture

The importance of agriculture, wine growing and forestry for the Grand Duchy’s economy has steadily declined over the years. Today’s official Statec figures for 1999 show Luxembourg’s agriculture accounting for just 0.7% of the total value added at market prices, while it amounted to around 4% a quarter of a century ago. Nevertheless, the output of this sector has almost tripled in the past 25 years.

Moreover, this phenomenon is not peculiar to Luxembourg’s agriculture, but can also be observed in the European Union as a whole. The shrinking role played by agriculture in Luxembourg’s GDP is mainly due to the expansion of the service sector and, in particular, banking, telecommunications, air-transport and audiovisual services. Today’s agriculture is more aware of environmental issues and contributes to protecting the natural habitat.

Industry

The early stages of Luxembourg’s industrial development were dominated by the steel industry in the mid-19th century. This
domination continued until the 1974-75 oil crisis, which transformed Luxembourg’s industrial habits and encouraged a service economy. The emergence of the service sector was accelerated by the trend towards ”outsourcing”, which involves shifting certain services to specialist sector companies.

Lastly, industrial diversification seems to be establishing itself as a permanent objective of economic policy. It has encouraged the emergence of a second industrial pole that includes the chemical industry, rubber and plastics. Today, the first steelindustry in the world, stemming from the merging of Arbed,
Usinor and Aceralia in February 2001, has its head-quarters in Luxembourg.

The media, communication and the Audio-visual Industry

As a multilingual country located at the crossroads of the Frenchand German-speaking cultures, Luxembourg plays a special role on the European media scene. The Grand Duchy is the home of two giants in the world of audio-visual communication, the European television and radio broadcaster RTL Group, and the satellite company Société Européenne des Satellites (SES), which operates the Astra satellites. On March 28, 2001 SES merged with GE Americom to create SES Global, the biggest satellite
company in the world.

Many SMEs active in the converging fields of multimedia and telecommunications have been set up in Luxembourg around these two pillars of audio-visual communication, forming a network of skills that is driving future economic development. The Luxembourg government is pursuing an active policy of developing audio-visual and communication services under the banner of the Luxembourg Mediaport. To this end, the potential offered by the movement towards liberalizing the European telecommunications market and the progress of technology are lending support.

As part of this proactive policy, Luxembourg adopted a number of public support schemes in the early 1990s to encourage the development of audio-visual production.

A Financial Centre

The establishment of the Luxembourg Stock Exchange and the 1929 laws on holding companies marked the beginning of international development in the financial sector. The Eurobond market of the 1960s contributed to the emergence of real banking know-how in Luxembourg.

The country’s current cash and asset management activities testify to Luxembourg’s adaptable approach to its development as a financial centre. The real expansion of Luxembourg’s collective investment undertakings (organismes de placement collectif - OPC) dates from 1983, with the first law regarding unit trust companies (sociétés d’investissement à capital variable - Sicav). The net assets of collective investment undertakings rose from 2 billion euro in 1970 to 924.5 billion euro as at May 2001 (Source: CSSF), taking Luxembourg to the first place in Europe for unit trust asset management.

Economic Summary

Currency: euro
Area: 2.586 sq.km
Of which : 49% agricultural
34% wooded
GDP at market prices for 2001 (in billions of EUR) : 21.2
GDP for 2001 (growth rate in %) : 3.5
Unemployment rate for 2001 (in %) : 2.6
Inflation rate for 2001 (in %) : 2.7
Goods exports (in billions of EUR) : 9.08 in 2001
Goods imports (in billions of EUR) : 12.3 in 2001
Number of banks by 1st January 2001: 189
Standard of living :
GDP: EUR 1063 in PPS* (per inhabitant) for 2000
Social Security benefits : EUR 229 in PPS* (per inhabitant)
for 1998
Cars: 632 (per 1000 inhabitants) for 2002
Doctors: 2.5 (per 1000 inhabitants) for 2001
* in Purchasing Power Standards (source Statec)
November 2002 - Photos: SES et FEDIL

Copyright © 2003 Embassy of Grand Duchy of Luxembourg and Globescope, Inc.