Economy

2018 competitiveness report - standing one's ground in difficult times

According to the 2018 edition of the national competitiveness report, the Grand Duchy is a high-performing country, ranking 9th in the European Union.

21-competitivite-2The Observatory for Competitiveness (Observatoire de la Compétitivité, ODC) has just published the latest edition of its performance scoreboard for the States of the European Union - the 2018 Competitiveness Report. This Luxembourgish benchmark provides a detailed analysis and comparison of 68 different indicators, grouped in sections entitled 'Economy', 'Social' and 'Environment'. In the overall ranking, the Grand Duchy occupies 9th position within the EU, thereby earning a place among those countries demonstrating "high-level performance".

The 'Economy' group of indicators: a mixed result

For the 'Economy' group, which covers 25 indicators including the stability, attractiveness and cost-competitiveness of a country, the Grand Duchy ranks 11th within the EU, behind the Netherlands (3rd place) and Germany (6th place) but ahead of Belgium (14th place) and France (16th place). This ranking is headed by Ireland, followed by Sweden.

The Grand Duchy's economic result is rather mixed: although the Grand Duchy leads the field for the 'GDP per hour worked' indicator and comes second for the 'Rate of inflation' and 'Public debt' indicators, it trails in last place for three indicators: the 'Average rate of annual variation in the global production of factors', 'Profitability of non-financial companies' and 'Proportion of employment in medium-high- and high-tech manufacturing industries'.

The 'Social' group of indicators - among the champions

For the social aspect, the Grand Duchy ranks 4th, which puts it among the champions (performance higher than 115% of the EU average), together with, inter alia, Slovenia (1st place), the Czech Republic (2nd place), and Malta (3rd place). Our neighbours rank 9th (Belgium), 14th (Germany) and 17th (France). The Netherlands rank 11th.

For the indicators 'Median income as purchasing power standard' and 'Net wealth per household', the Grand Duchy stands out well ahead of all its European competitors, in first place. The Grand Duchy's other strong points are a low level of unemployment among young people (5.9%), the gap between pay for men and women (5.5%), and virtually non-existent material deprivation (1.17%). 

'Environment' indicators: stable performance

In the 2018 Competitiveness Report, the Grand Duchy's result for the 'Environment' aspect is the same as in the previous edition; the Grand Duchy is among the high-performance countries, occupying 14th place. In general, this category varies less from one year to the next. This ranking is headed by the United Kingdom, Spain and Croatia. The Netherlands occupy 6th place, France occupies 11th place, Germany 15th place, and Belgium 21stplace.

The Grand Duchy's strong points in the environmental field, according to the report, are its 'Total expenditure on protection of the environment' (1st place), its scores in the 'Eco-innovation index' (3rd place), and 'Urban population exposure to air pollution'. On the other hand, the Grand Duchy stands in second-to-last place for energy from renewable sources.

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Economic diversification and priority sectors

The 2018 competitiveness report also looks at economic diversification and priority sectors in the Grand Duchy. The Grand Duchy's pronounced dependence on its financial sector, which on its own represents 26.5% of GDP, is generally deemed a potential danger for the economy. To make good this lack of diversification, the Luxembourg Government has defined and actively promotes economic development in five new priority sectors: information and communication technologies, logistics, health sciences and technologies, eco-technologies, and space technologies.

According to the report, these priority sectors represented, in 2016, 9.6% of the country's gross added value, 31,000 jobs and 3,047 businesses. The ICT sector represents far and away the largest proportion in terms of added value and employment. Whereas growth in the different sectors varies, there has been a general positive evolution in the performances of these five priority sectors in the past few years.

International benchmarks and rankings

The 2018 competitiveness report also analyses and monitors other international benchmarks and rankings. The Observatory keeps a close eye on the annual reports produced by the World Economic Forum, the Institute for Management Development (IMD), the Heritage Foundation, and the European Commission. According to the report, nearly all the benchmarks analysed place the Grand Duchy in the top 10 within the EU, which confirms the result of the 2018 national competitiveness scoreboard.

(article written by the editorial team of the portal luxembourg.lu)
  • Updated 03-12-2018