Attractiveness and competitiveness are two sides of the same coin. Good performance and a favourable ranking on these two indicators are pre-requisites for strong and steady corporate growth. This is especially true within the Luxembourg economy, which is small in size and particularly outward-facing. One indicator with a direct influence on companies’ performance and the attractiveness and competitiveness of an economy is productivity. 

Forecasting is not an exact science, but in economics it is an indispensable exercise. Anticipating trends in order to make the best decisions (especially political ones) at the right time is of the utmost importance. The work of prediction draws on the lessons we have learned from the past and the challenges posed by the present.

At the start of this year, the Council of the European Union’s analysis and research team compiled and summarised some 20 predictive studies for 2023 carried out by various media outlets, research institutes, think tanks and insurance companies from around the world. This is valuable work, as it gives us an overview of the challenges we face.

Luxembourg’s economy is distinguished by being extremely open internationally (share of exports and imports in GDP) and, on the basis of this indicator, ranks among the most open in the world (as are Singapore, Hong Kong, etc.). This is explained by the considerable weight in its foreign trade of exports of services, nearly 50% of which are of a financial nature. But the fact remains that foreign trade in goods also plays a decisive role in the creation of economic value and Luxembourg companies are increasingly adopting the path of selling their products to clients residing abroad – an obvious choice, since the chances of increasing sales are limited within the confines of the home market. The business plans of many companies established in Luxembourg are exclusively targeted at international markets and the Grand Duchy offers numerous advantages as an international platform for developing import/export activities with partners located throughout the globe.

Being an economic analyst in these times is a challenge. And for good reason: in recent months, the global economic situation has been riddled with a series of significant shocks that have regularly changed forecasts. After, ‘everything depends on vaccination rates’, and ‘everything depends on price trends’, came, ‘everything depends on the situation in Ukraine’. Indeed, beyond the dramatic human consequences of this new crisis that has blindsided the entire world, the invasion of Ukraine has a much greater global impact than we could have imagined: increased shortages of electronic materials and raw materials in general, scarcity of basic food products, and more. Above all, this international crisis is right on the heels of a previous international crisis that already greatly weakened the economic fabric.