Nation at a Glance - Luxembourg

History

Founded in 963, Luxembourg became a grand duchy in 1815 and an independent state under the Netherlands. It lost more than half of its territory to Belgium in 1839 but gained a larger measure of autonomy. Full independence was attained in 1867. Overrun by Germany in both world wars, it ended its neutrality in 1948 when it entered into the Benelux Customs Union and when it joined NATO the following year. In 1957, Luxembourg became one of the six founding countries of the EEC (later the EU), and in 1999 it joined the euro currency area.

Location: Western Europe, between France and Germany

Border Countries: Belgium 130 km, France 69 km, Germany 128 km

Total Area: 2,586 sq km Land: 2,586 sq km Water: 0 sq km

Climate: Modified continental with mild winters, cool summers

Terrain: Mostly gently rolling uplands with broad, shallow valleys; uplands to slightly mountainous in the north; steep slope down to Moselle flood plain in the southeast

Natural resources: Iron ore (no longer exploited), arable land

Land use: Agricultural land: 50.7% arable land 24%; permanent crops 0.6%; permanent pasture 26.1% Forest: 33.5% Other: 15.8% (2011 est.)

Ethnic groups: Luxembourger 54.1%, Portuguese 16.4%, French 7%, Italian 3.5%, Belgian 3.3%, German 2.3%, British 1.1%, Other 12.3%

Languages: Luxembourgish (official administrative and judicial language and national language (spoken vernacular)) 88.8%, French (official administrative, judicial, and legislative language) 4.2%, Portuguese 2.3%, German (official administrative and judicial language) 1.1%, Other 3.5% (2011 est.)

Religions: Roman Catholic 87%, Other (includes Protestant, Jewish, and Muslim) 13% (2000)

Population: 582,291 (July 2016 est.)

Administrative divisions: 12 cantons (cantons, singular - canton); Capellen, Clervaux, Diekirch, Echternach, Esch-sur-Alzette, Grevenmacher, Luxembourg, Mersch, Redange, Remich, Vianden, Wiltz

Economy: This small, stable, high-income economy has historically featured solid growth, low inflation, and low unemployment. Luxembourg, the only Grand Duchy in the world, is a landlocked country in northwestern Europe surrounded by Belgium, France, and Germany. Despite its small landmass and small population, Luxembourg is the second-wealthiest country in the world when measured on a gross domestic product (PPP) per capita basis. Luxembourg has one of the highest current account surpluses as a share of GDP in the euro zone, and it maintains a healthy budgetary position, with a 2017 surplus of 0.5% of GDP, and the lowest public debt level in the region. Since 2002, Luxembourg’s government has proactively implemented policies and programs to support economic diversification and to attract foreign direct investment. The government focused on key innovative industries that showed promise for supporting economic growth: logistics, information and communications technology (ICT); health technologies, including biotechnology and biomedical research; clean energy technologies, and more recently, space technology and financial services technologies. The economy has evolved and flourished, posting strong GDP growth of 3.4% in 2017, far outpacing the European average of 1.8%. Luxembourg remains a financial powerhouse – the financial sector accounts for more than 35% of GDP - because of the exponential growth of the investment fund sector through the launch and development of cross-border funds (UCITS) in the 1990s. Luxembourg is the world’s second-largest investment fund asset domicile, after the US, with $4 trillion of assets in custody in financial institutions. Luxembourg has lost some of its advantage as a favorable tax location because of OECD and EU pressure, as well as the “LuxLeaks” scandal, which revealed advantageous tax treatments offered to foreign corporations. In 2015, the government’s compliance with EU requirements to implement automatic exchange of tax information on savings accounts - thus ending banking secrecy - has constricted banking activity. Likewise, changes to the way EU members collect taxes from e-commerce has cut Luxembourg’s sales tax revenues, requiring the government to raise additional levies and to reduce some direct social benefits as part of the tax reform package of 2017. The tax reform package also included reductions in the corporate tax rate and increases in deductions for families, both intended to increase purchasing power and increase competitiveness.

Agriculture - products: Grapes, barley, oats, potatoes, wheat, fruits; dairy and livestock products

Industries: Banking and financial services, construction, real estate services, iron, metals, and steel, information technology, telecommunications, cargo transportation and logistics, chemicals, engineering, tires, glass, aluminum, tourism, biotechnology