Liechtenstein: Five Things You May Not Know About the IMF’s Newest Member

IMF News, October 21, 2024

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The IMF welcomed the Principality of Liechtenstein as its 191st member.
Prime Minister Daniel Risch signed the IMF’s Articles of Agreement in a ceremony in Washington, D.C at the beginning of the 2024 Annual Meetings, and the country now attends the Annual Meetings as a full member.
Authors: Rodgers Chawani (senior economist) and Kazuko Shirono (deputy chief), both in the IMF's European Department.

Liechtenstein is one of only two doubly landlocked countries worldwide, along with Uzbekistan.
Total area: 160 sq. km, comparable to the size of the city of Washington D.C.
Location: between Austria and Switzerland in the Alps; a winter sports destination.
Population: about 40,000 people (noted as “about 40,000”).
Vaduz is the best-known city, but Schaan has a larger population.
Among six smallest European states—Andorra, Malta, Monaco, San Marino, and Vatican City—Liechtenstein has the third-largest total area.

Constitutional form: parliamentary constitutional principality; the 1921 constitution defines the principality as “a constitutional, hereditary monarchy on a democratic and parliamentary basis.”
Government: a five-member cabinet nominated by parliament and appointed by the prince for a four-year term.
Parliament: Twenty-five members serving a four-year term.
Civil service: 1,500 civil servants, less than 4 percent of the population, significantly lower than the EU average of about 17 percent.

Per capita income: US$197K/year, the second highest per capita income in Europe, behind Monaco.
Research and development: 6.2 percent of GDP.
Industry:
- Share of industry: 42 percent of gross value added, well above the EU average (about 15 percent).
- Manufacturing strengths: machine and tool engineering, plant construction, precision and dental instruments; export-oriented and globally competitive.
Financial sector: mostly private banking, wealth management, insurance, and trust services; accounts for about 20 percent of GDP.

Workforce: 42,500 in 2022, exceeding the resident population of approximately 40,000.
Commuting:
- About half of the workforce are inward, cross-border commuters from Austria, Germany, and Switzerland.
- Of commuters, 59 percent commute daily from Switzerland and 37 percent from Austria.
Labor market indicators:
- Labor force participation: 76.1 percent, vis-à-vis 74.9 percent in the EU.
- Unemployment rate: below 2 percent.

Major export destinations include the US, Germany, and Switzerland.
Membership in the European Economic Area provides full access to the EU’s single market, including financial markets, under rules for free movement of services and capital.
Financial integration and oversight:
- Access to the EU’s financial market and oversight by the European Banking Authority.
- Liechtenstein’s financial institutions have extended private wealth management networks outside the EU to Asia and the Middle East.
Strong economic ties with Switzerland, including use of the Swiss franc, supporting trade and labor market integration.

Liechtenstein: Five Things You May Not Know About the IMF’s Newest Member — Rodgers Chawani and Kazuko Shirono, October 21, 2024 (IMF News).