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France vs. Luxembourg

Economy

FranceLuxembourg
Economy - overview

The French economy is diversified across all sectors. The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault, and Thales. However, the government maintains a strong presence in some sectors, particularly power, public transport, and defense industries. France is the most visited country in the world with 89 million foreign tourists in 2017. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that mitigate economic inequality.

France's real GDP grew by 1.9% in 2017, up from 1.2% the year before. The unemployment rate (including overseas territories) increased from 7.8% in 2008 to 10.2% in 2015, before falling to 9.0% in 2017. Youth unemployment in metropolitan France decreased from 24.6% in the fourth quarter of 2014 to 20.6% in the fourth quarter of 2017.

France's public finances have historically been strained by high spending and low growth. In 2017, the budget deficit improved to 2.7% of GDP, bringing it in compliance with the EU-mandated 3% deficit target. Meanwhile, France's public debt rose from 89.5% of GDP in 2012 to 97% in 2017.

Since entering office in May 2017, President Emmanuel MACRON launched a series of economic reforms to improve competitiveness and boost economic growth. President MACRON campaigned on reforming France's labor code and in late 2017 implemented a range of reforms to increase flexibility in the labor market by making it easier for firms to hire and fire and simplifying negotiations between employers and employees. In addition to labor reforms, President MACRON's 2018 budget cuts public spending, taxes, and social security contributions to spur private investment and increase purchasing power. The government plans to gradually reduce corporate tax rate for businesses from 33.3% to 25% by 2022.

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 fifth-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.

GDP (purchasing power parity)$3,097,061,000,000 (2019 est.)

$3,051,034,000,000 (2018 est.)

$2,997,296,000,000 (2017 est.)

note: data are in 2010 dollars
$70.966 billion (2019 est.)

$69.373 billion (2018 est.)

$67.28 billion (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate1.49% (2019 est.)

1.81% (2018 est.)

2.42% (2017 est.)
2.31% (2019 est.)

3.14% (2018 est.)

1.81% (2017 est.)
GDP - per capita (PPP)$46,184 (2019 est.)

$45,561 (2018 est.)

$44,827 (2017 est.)

note: data are in 2010 dollars
$114,482 (2019 est.)

$114,110 (2018 est.)

$112,823 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 1.7% (2017 est.)

industry: 19.5% (2017 est.)

services: 78.8% (2017 est.)
agriculture: 0.3% (2017 est.)

industry: 12.8% (2017 est.)

services: 86.9% (2017 est.)
Population below poverty line13.6% (2018 est.)17.5% (2018 est.)
Household income or consumption by percentage sharelowest 10%: 3.6%

highest 10%: 25.4% (2013)
lowest 10%: 3.5%

highest 10%: 23.8% (2000)
Inflation rate (consumer prices)1.1% (2019 est.)

1.8% (2018 est.)

1% (2017 est.)
1.7% (2019 est.)

1.5% (2018 est.)

1.7% (2017 est.)
Labor force27.742 million (2020 est.)476,000 (2020 est.)

note: data exclude foreign workers; in addition to the figure for domestic labor force, about 150,000 workers commute daily from France, Belgium, and Germany
Labor force - by occupationagriculture: 2.8% (2016 est.)

industry: 20% (2016 est.)

services: 77.2% (2016 est.)
agriculture: 1.1%

industry: 20%

services: 78.9% (2013 est.)
Unemployment rate8.12% (2019 est.)

8.69% (2018 est.)

note: includes overseas territories
5.36% (2019 est.)

5.46% (2018 est.)
Distribution of family income - Gini index31.6 (2017 est.)

29.2 (2015)
34.9 (2017 est.)

26 (2005 est.)
Budgetrevenues: 1.392 trillion (2017 est.)

expenditures: 1.459 trillion (2017 est.)
revenues: 27.75 billion (2017 est.)

expenditures: 26.8 billion (2017 est.)
Industriesmachinery, chemicals, automobiles, metallurgy, aircraft, electronics; textiles, food processing; tourismbanking 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
Industrial production growth rate2% (2017 est.)1.9% (2017 est.)
Agriculture - productswheat, sugar beet, milk, barley, maize, potatoes, grapes, rapeseed, pork, applesmilk, wheat, barley, triticale, potatoes, pork, beef, grapes, rapeseed, oats
Exports$969.077 billion (2019 est.)

$952.316 billion (2018 est.)

$910.613 billion (2017 est.)
$133.61 billion (2019 est.)

$132.487 billion (2018 est.)

$131.834 billion (2017 est.)
Exports - commoditiesaircraft, packaged medicines, cars and vehicle parts, gas turbines, wine (2019)iron and iron products, tires, cars, broadcasting equipment, clothing and apparel  (2019)
Exports - partnersGermany 14%, United States 8%, Italy 7%, Spain 7%, Belgium 7%, United Kingdom 7% (2019)Germany 23%, France 13%, Belgium 12%, Netherlands 6%, Italy 5% (2019)
Imports$1,021,633,000,000 (2019 est.)

$995.937 billion (2018 est.)

$965.949 billion (2017 est.)
$111.287 billion (2019 est.)

$110.275 billion (2018 est.)

$110.656 billion (2017 est.)
Imports - commoditiescars, crude petroleum, refined petroleum, packaged medicines, aircraft machinery (2019)cars, refined petroleum, broadcasting equipment, scrap iron, aircraft (2019)
Imports - partnersGermany 18%, Belgium 9%, Italy 9%, Spain 7%, China 7%, Netherlands 6%, United Kingdom 5% (2019)Belgium 27%, Germany 24%, France 11%, Netherlands 5% (2019)
Debt - external$6,356,459,000,000 (2019 est.)

$6,058,438,000,000 (2018 est.)
$4,266,792,000,000 (2019 est.)

$4,581,617,000,000 (2018 est.)
Exchange rateseuros (EUR) per US dollar -

0.82771 (2020 est.)

0.90338 (2019 est.)

0.87789 (2018 est.)

0.885 (2014 est.)

0.7634 (2013 est.)
euros (EUR) per US dollar -

0.82771 (2020 est.)

0.90338 (2019 est.)

0.87789 (2018 est.)

0.885 (2014 est.)

0.7634 (2013 est.)
Fiscal yearcalendar yearcalendar year
Public debt96.8% of GDP (2017 est.)

96.6% of GDP (2016 est.)

note: data cover general government debt and include debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
23% of GDP (2017 est.)

20.8% of GDP (2016 est.)

note: data cover general government debt and include debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions
Reserves of foreign exchange and gold$156.4 billion (31 December 2017 est.)

$138.2 billion (31 December 2015 est.)
$878 million (31 December 2017 est.)

$974 million (31 December 2016 est.)
Current Account Balance-$18.102 billion (2019 est.)

-$16.02 billion (2018 est.)
$3.254 billion (2019 est.)

$3.296 billion (2018 est.)
GDP (official exchange rate)$2,715,574,000,000 (2019 est.)$71.089 billion (2019 est.)
Credit ratingsFitch rating: AA (2014)

Moody's rating: Aa2 (2015)

Standard & Poors rating: AA (2013)
Fitch rating: AAA (1994)

Moody's rating: Aaa (1989)

Standard & Poors rating: AAA (1994)
Ease of Doing Business Index scoresOverall score: 76.8 (2020)

Starting a Business score: 93.1 (2020)

Trading score: 100 (2020)

Enforcement score: 73.5 (2020)
Overall score: 69.6 (2020)

Starting a Business score: 88.8 (2020)

Trading score: 100 (2020)

Enforcement score: 73.3 (2020)
Taxes and other revenues53.8% (of GDP) (2017 est.)44.4% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)-2.6% (of GDP) (2017 est.)1.5% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 19.6%

male: 20.8%

female: 18.2% (2019 est.)
total: 17%

male: 17.8%

female: 16% (2019 est.)
GDP - composition, by end usehousehold consumption: 54.1% (2017 est.)

government consumption: 23.6% (2017 est.)

investment in fixed capital: 22.5% (2017 est.)

investment in inventories: 0.9% (2017 est.)

exports of goods and services: 30.9% (2017 est.)

imports of goods and services: -32% (2017 est.)
household consumption: 30.2% (2017 est.)

government consumption: 16.5% (2017 est.)

investment in fixed capital: 16.2% (2017 est.)

investment in inventories: 1.1% (2017 est.)

exports of goods and services: 230% (2017 est.)

imports of goods and services: -194% (2017 est.)
Gross national saving23.4% of GDP (2019 est.)

23.1% of GDP (2018 est.)

22.8% of GDP (2017 est.)
16.7% of GDP (2019 est.)

17.4% of GDP (2018 est.)

17.6% of GDP (2017 est.)

Source: CIA Factbook