quality:corruption, structural:reformatting, stylistic:style_transfer, information:extraction, linguistic:voice_change
Economy

Luxembourg's stable and high-income market economy features moderate growth, low inflation, and a high level of innovation. Unemployment is traditionally low, though it reached 6.1% by May 2012, due largely to the 2008 global financial crisis. In 2011, according to the IMF, Luxembourg was the world's second-richest country, with a per capita GDP on a purchasing-power parity (PPP) basis of $80,119. Its GDP per capita in purchasing power standards was 261% of the EU average (100%) in 2019. Luxembourg ranks 13th in The Heritage Foundation 's Index of Economic Freedom, 26th in the United Nations Human Development Index, and 4th in the Economist Intelligence Unit's quality of life index. It ranked 21st in the Global Innovation Index in 2023, down from 18th in 2020.

The industrial sector, dominated by steel until the 1960s, has since diversified to include chemicals, rubber, and other products. During recent decades, growth in the financial sector has more than compensated for the decline in steel production. Services, especially banking and finance, account for the majority of the economic output. Luxembourg is the world's second-largest investment fund center (after the United States), the most important private banking center in the eurozone and Europe's leading center for reinsurance companies. Moreover, Luxembourg's government has aimed to attract Internet startups, with Skype and Amazon being two of the many Internet companies that have shifted their regional headquarters to Luxembourg. Other high-tech companies have established themselves in Luxembourg, including 3D scanner developer/manufacturer Artec 3D.

In April 2009, concern about Luxembourg's banking secrecy laws, as well as its reputation as a tax haven, led to its being added to a "gray list" of nations with questionable banking arrangements by the G20. In response, the country soon adopted OECD standards on exchange of information and was subsequently added into the category of "jurisdictions that have substantially implemented the internationally agreed tax standard". In March 2010, the Sunday Telegraph reported that most of Kim Jong Il 's $4 billion in secret accounts was in Luxembourg banks. Amazon.co.uk also benefits from Luxembourg tax loopholes by channeling substantial U.K. revenues, as reported by The Guardian in April 2012. Luxembourg ranked third on the Tax Justice Network 's 2011 Financial Secrecy Index of the world's major tax havens, scoring only slightly behind the Cayman Islands. In 2013, Luxembourg was ranked the second safest tax haven in the world, behind Switzerland.

In early November 2014, just days after becoming head of the European Commission, Luxembourg's former Prime Minister Jean-Claude Juncker was hit by media disclosures—derived from a document leak known as Luxembourg Leaks —that Luxembourg had turned into a major European center of corporate tax avoidance under his premiership.

Agriculture employed about 2.1% of Luxembourg's active population in 2010, when there were 2,200 agricultural holdings with an average area per holding of 60 hectares.

Luxembourg has especially close trade and financial ties to Belgium and the Netherlands (see Benelux), and as a member of the EU it enjoys the advantages of the open European market.

With $171 billion in May 2015, the country ranked 11th in the world in holdings of U.S. Treasury securities. However, securities owned by non-Luxembourg residents, but held in custodial accounts in Luxembourg, are included in this figure.

As of 2019, Luxembourg's public debt totaled $15,687,000,000, or $25,554 per capita. The debt to GDP was 22.10%.

The Luxembourg labor market represents 445,000 jobs occupied by 120,000 Luxembourgers, 120,000 foreign residents and 205,000 cross-border commuters. The latter pay their taxes in Luxembourg, but their education and social rights are the responsibility of their country of residence. The same applies to pensioners. Luxembourg's government has never shared its tax revenues with the local authorities on the French border. This system is seen as one of the keys to Luxembourg's economic growth, but at the expense of the border countries.