OECD Economic Surveys: Luxembourg 2017 (eBook)

Oecd (Autor)

eBook Download: EPUB

2017 | 1. Auflage
41 Seiten
OECD Publishing (Verlag)
978-92-64-27705-2 (ISBN)

Infos

Luxembourg’s economic performance is robust thanks to its dynamic services sector, sound fiscal policies and openness to global talent. The pace of job creation is strong and benefits not only residents but also cross-border workers and immigrants. The large financial sector is well supervised, but to reduce reliance on the financial industry the government should further develop its long-term strategy focusing on new digital technologies and renewable energy.

Supplying the skills needed in these new sectors will require further improvements in the education system, with a focus on lifelong learning. Better alignment of skills with labour market needs would entail reorienting labour market policies from supporting job creating towards funding training programmes to facilitate the reallocation of labour. Luxembourg benefits from immigrants who play a successful role in the economy. Integration challenges remain, though, especially regarding people from non-EU countries, who suffer from high unemployment. As language proficiency is a key precondition for successful integration, public supply of language courses should be stepped up further. Education reforms seek to make schools more equitable, also for the children of immigrants, and equality between men and women is being promoted by easing access to childcare and making taxation more gender neutral.

SPECIAL FEATURES: BOOSTING SKILLS; IMPROVING THE INTEGRATION OF IMMIGRANTS

Textauszug

Assessment and recommendations

Luxembourg is an advanced economy with the highest per capita income in the OECD, reflecting the dynamic services sector, notably in banking and other financial services. Foreign investment is attracted by the business-friendly regulations, predictable tax system and sound macroeconomic policies. Foreign workers are attracted by the abundance of jobs and many cross-border workers commute every day from neighbouring regions. More than 40% of total employment is filled by non-residents, while some 45% of residents are foreigners who do not hold Luxembourg citizenship. Because of the high share of cross-border workers the gross national income (GNI), which excludes factor income from domestic production that accrues to non-residents, is lower than gross domestic product (GDP) by about a third (OECD, 2015a).

Strong economic performance and well-run institutions make life good for most residents (Figure 1). Average earnings are the highest in the OECD, while labour market insecurity and the long-term unemployment rate are well below the OECD average. Income inequality is low and poverty is limited thanks to the redistributive tax and transfer system, making Luxembourg one of the most egalitarian countries of the OECD. Yet, outcomes in education and skills remain below the OECD average and room for improvement exists in other areas, such as climate and energy.

Figure 1. Life is good in Luxembourg

Note: Each index dimension is measured by one to four indicators from the OECD Better Life Index (BLI) set. Normalised indicators are averaged with equal weights. Indicators are normalised to range between 10 (best) and 0 according to the following formula: (indicator value – minimum value) / (maximum value – minimum value) × 10. The OECD aggregate is weighted by population.

Source: OECD (2016), OECD Better Life Initiative 2016, www.oecd.org/statistics/better-life-initiative.htm.

StatLink  http://dx.doi.org/10.1787/888933495750

Since the last Economic Survey, the government has introduced several reforms to further improve Luxembourg’s economic performance. Thanks to fiscal surpluses, a new tax reform will gradually reduce the corporate income tax rate, while making the personal income taxes more progressive and introducing new tax credits for investors and low-income earners. The disability benefit system was reformed to facilitate labour market re-integration of workers with partial disabilities and increase the effective retirement age by limiting transition from disability to early retirement. Some stringent regulations were eased: the fixed tariffs for services of architects and engineers were abolished and the procedure for issuing housing permits simplified. Education sector reforms increased the availability of early childhood education and care and support for university students.

Against this backdrop, the key messages from the Survey are:

• The fiscal position is currently strong, with a very low public debt ratio, but on unchanged policies, age-related government spending will increase sharply in the long run, especially pensions.

• The modernisation strategy will require improvements in education outcomes, especially for immigrants, to enhance equity and social cohesion, and better upskilling of workers over their lifetime.

• Inclusive growth would also benefit from reducing work disincentives faced by low-skilled youth, women and older workers.

Macroeconomic developments

Economic growth is projected to stay strong

GDP growth has been strong and resilient in the past three years and is projected to remain robust, at 4%, well above the euro area average (Table 1 and Figure 2). The growth of total factor productivity has been strong. The external position remains characterised by a strong current account surplus, stemming from trade in services – mainly exports of financial services, and net international assets of 20% of GDP. The debt of non-financial corporate sector is high, in part due to debt issuance of multinational companies (Figure 2). Exports are projected to strengthen as financial sector activity further expands, thus boosting Luxembourg’s external position. In addition to supportive monetary conditions, fiscal policy is projected to provide a strong impetus to domestic demand in both 2017 and 2018, following the reductions in personal and corporate income tax rates. As a result, the fiscal surplus of the general government is projected to decline in 2017 and remain broadly stable in 2018. With economic activity remaining strong, total employment has expanded fast, helping to reduce the unemployment rate from 7.1% in 2014 to 6.4% in 2016. Inflation rebounded in the second half of 2016, following the reversal in oil prices. With the cumulative increase of consumer prices reaching the 2.5% threshold, the automatic indexation of wages and pensions was triggered for the first time since 2013. The immediate wage increase could provide an impetus to the core inflation and rekindle wage growth that stayed below 1% in both 2015 and 2016.

Table 1. Macroeconomic indicators and projections

Annual percentage change, volume (2010 prices)

	2013 Current prices (billion EUR)	2014	2015	2016	Projections

2017	2018

Gross domestic product (GDP)

46.5

5.6

4.0

4.2

4.5

4.2

Private consumption

14.8

2.9

3.3

1.0

3.2

3.2

Government consumption

8.0

2.0

2.4

3.2

1.8

2.7

Gross fixed capital formation

8.9

5.7

-0.9

0.2

9.2

4.3

Final domestic demand

31.7

3.4

1.8

1.3

4.6

3.4

Stockbuilding1

-0.7

0.4

0.8

-0.2

0.0

0.0

Total domestic demand

30.9

7.2

3.4

0.8

4.5

3.6

Exports of goods and services

89.8

11.4

11.2

4.3

5.0

4.6

Imports of goods and services

74.3

12.4

12.1

4.0

5.2

4.5

Net exports1

15.6

2.2

2.2

2.1

1.5

2.0

Other indicators (growth rates, unless specified)

Potential GDP

. .

3.4

3.2

3.0

3.0

3.1

Output gap2

. .

-2.0

-1.3

-0.1

1.4

2.5

Employment

. .

2.3

2.1

2.2

2.5

2.1

Unemployment rate

. .

7.1

6.8

6.4

6.0

5.9

GDP deflator

. .

1.6

0.7

-0.6

1.6

2.0

Harmonised consumer price index

. .

0.7

0.1

0.0

2.4

1.6

Harmonised core consumer price index

. .

1.3

1.7

1.0

1.1

1.7

Household saving ratio, net3

. .

15.1

15.6

16.7

16.7

16.6

Current account balance4

. .

5.0

5.1

4.7

4.7

4.8

General government financial balance4

. .

1.4

1.4

1.6

0.7

0.6

Underlying government primary fiscal balance2

....

Produkt-Details

• Erscheint lt. Verlag: 21.7.2017
• Sprache: englisch
• Themenwelt: Naturwissenschaften ► Geowissenschaften ► Geografie / Kartografie
• Themenwelt: Sozialwissenschaften ► Politik / Verwaltung ► Staat / Verwaltung
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Makroökonomie
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre ► Wirtschaftspolitik
• ISBN-10: 92-64-27705-6 / 9264277056
• ISBN-13: 978-92-64-27705-2 / 9789264277052