Luxembourg: 2016 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Luxembourg
IMF Staff Country Reports, May 16, 2016
Source details
- Canonical URL
- Luxembourg: 2016 Article IV Consultation-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Luxembourg
Other formats
Bibliographic details
- Published: May 16, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484349113.002
Summary findings and growth prospects
- Luxembourg’s small open economy plays a pivotal role in intermediating global capital flows.
- Deep-rooted traditions of fiscal prudence, business-friendly regulation, a skilled labor force, and low and predictable taxes have made Luxembourg:
- a global financial center,
- home of multinational companies,
- one of the richest countries in the European Union (EU).
- Financial market stress could affect Luxembourg’s performance; in case of severe external shocks, unraveling financial exposures could prompt dislocations in markets or institutions beyond the scope of national authorities.
- The European Banking Union and EU financial regulations frameworks are particularly positive for Luxembourg.
Financial sector structure and vulnerabilities
- Luxembourg’s role as an intermediary of global capital flows is central to its economy.
- Potential vulnerabilities:
- Exposure to financial market stress that could transmit through institutions or markets.
- Risk that severe external shocks would lead to unraveling financial exposures with cross-border implications.
Policy context and institutional strengths
- Structural strengths highlighted:
- Fiscal prudence.
- Business-friendly regulation.
- Skilled labor force.
- Low and predictable taxes.
- EU-level frameworks that support stability:
- European Banking Union.
- EU financial regulations frameworks.
Subjects and keywords (as provided)
- Subject: Banking, Commercial banks, Economic sectors, Expenditure, Financial institutions, Financial sector, Mutual funds, Pension spending, Public debt
- Keywords: April update, Commercial banks, CR, Europe, Financial sector, GDP, General government balance, Global, government, ISCR, liability positions vis-à-vis nonresident, Luxembourg's medium-term objective, Luxemburg, Middle East, Mutual funds, Pension spending, potential GDP, public debt projection