Sustainable Governance Indicators: Report Luxembourg

Situated in the center of Europe and bordered by Belgium, France and Germany, the Grand Duchy of Luxembourg is a multilingual and cross-border area par excellence. In January 2021, the country’s population was 634,730 inhabitants, of whom 47.42% were foreigners of some 70 different nationalities. Luxembourg is part of all significant European and international multilateral organizations, is one the three seats of EU institutions (alongside the cities of Brussels and Strasbourg) and is a key international financial center.

After a decline in GDP of only 1.3% in 2020 (the economic impact of the coronavirus pandemic was relatively benign because of the structure of  Luxembourg’s economy), GDP growth was expected to return to a positive rate of 4% in 2021, and 2.6% in the medium term (estimations by STATEC). With an average growth rate of 2.1% over the last five years, Luxembourg’s economic growth rate is almost four times higher than that of the euro area. The Grand Duchy is considered to be the third-most-open economy in the  world, with an openness ratio of 158.2% of GDP.

The country has an export intensive economy, with a recurrent trade deficit. The share of foreign trade in Luxembourg’s GDP is currently higher than 30%. Even during the coronavirus crisis, the country has continued to pursue its strategy of public investment. Direct and indirect investments were expected to reach 4.3% of GDP in 2021, a significantly higher level than the average of 3.7% during the 2015-2019 period (...)