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OECD-main-findings-Luxembourg-2015-diversifying-growth

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OECD main findings Luxembourg 2015 diversifying growth

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OECD-main-findings-Luxembourg-2015-diversifying-growth

  1. 1. http://www.oecd.org/eco/surveys/economic-survey-luxembourg.htm OECD OECD Economics 2015 OECD ECONOMIC SURVEY OF LUXEMBOURG Diversifying growth Luxembourg, Friday 27th March 2015
  2. 2. Incomes and well-being belong to the highest in the OECD Difference in GDP per capita to the 10 OECD economies with the highest GDP 2 Note: Simple average of the 10 OECD countries with the highest GDP per capita (in constant 2005 PPPs) in 2013. Source: OECD. Well-Being outcomes: Better Life Index, 2014 Indicator range from 0 to 10 (best) Source: OECD (2014), OECD Better Life Index, www.oecdbetterlifeindex.org. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 1990 91 92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 USD, constant 2005 PPP Real GDP per capita, Luxembourg Real GDP per capita, 10 highest economies 0 1 2 3 4 5 6 7 8 9 10 Income and wealth Jobs and earnings Housing Work and life balance Health status Education and skillsSocial connections Civic engagement and governance Environmental quality Personal security Subjective well-being LUX OECD
  3. 3. Dependence on the financial sector is high 3 Share of financial and insurance activities in total value added, 2013 Source: Eurostat. % 0 5 10 15 20 25 30 Germany United Kingdom Switzerland Luxembourg
  4. 4. Structural unemployment has increased 4 Productivity Source: OECD Economic Outlook 96. Unemployment -1 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Y-o-y % changes Potential GDP per capita growth Trend labour productivity growth 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % Structural unemployment rate Unemployment rate
  5. 5. Main Findings • Luxembourg is one of the most prosperous countries in the OECD and an attractive business location. • The financial sector is an important source of high incomes. • The economy depends to a large extent on the financial sector, creating potential vulnerabilities. • Economic diversification could raise productivity growth and reduce vulnerabilities. 5
  6. 6. Key Recommendations • Continue efforts to secure comprehensive risk assessment in financial markets and effective cross-border resolution of banks. • Improve the evaluation of the effectiveness of public R&D spending and cluster policies to support economic diversification. • Reduce disincentives for labour force participation of women. • Strengthen fiscal planning via a spending review mechanism linked to the medium-term budgeting framework. 6
  7. 7. Strengthening the performance and resilience of the financial sector
  8. 8. Banking is international 8 Banks in Luxembourg by origin (end 2014) Number, percentage in parenthesis Source: Commission de Surveillance du Secteur Financier, Luxembourg. Luxembourg 5 (3.3) Belgium 7 (4.7) Germany 33 (22.2) France 15 (10.1) United Kingdom 9 (6.0)Switzerland 12 (8.1) Other EU 31 (20.9) United States 6 (4.0) China 6 (4.0) Brasil 5 (3.3) Japan 5 (3.3) Other World 14 (9.4)
  9. 9. Bank credit was resilient during the crisis 9 Bank credit and non-performing loans Source: STATEC; BCL. 0 5 10 15 20 25 30 35 40 45 2006 07 08 09 10 11 12 13 EUR billion Credit to non-financial corporations in Luxembourg Credit to households in Luxembourg 0 1 2 3 4 5 6 7 8 2006 07 08 09 10 11 12 13 Luxembourg Euro Area % of total gross loans A. Bank credit to the private sector continued to grow during the crisis B. Non-performing loans of credit institutions stayed low
  10. 10. Non-bank business is on the rise 10 Assets of banks and investment funds 1. Undertakings for Collective Investment (UCI): net assets. Source: CSSF 500 1000 1500 2000 2500 3000 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 EUR billion Credit institutes: Total assets Investment Fund: Assets under management¹
  11. 11. Banks are comparatively well capitalised 11 Banks’ capital ratios Note: Based on quarterly data as of December 2013; where these are not available the most recent available data are taken, extending back to December 2012. Source: IMF Financial Soundness Indicators report; http://fsi.imf.org/. 0 5 10 15 20 25 Spain Italy United States Netherlands France United Kingdom Switzerland Austria Belgium Germany Ireland Luxembourg % A. Regulatory capital to risk-weighted assets 0 5 10 15 20 25 Italy Spain Netherlands United States France Austria United Kingdom Germany Belgium Switzerland Ireland Luxembourg % B. Regulatory tier 1 capital to risk-weighted assets
  12. 12. Ensure a healthy financial sector • Sound financial market regulation has supported growth of the financial sector. • Continue to monitor financial market risk while using a comprehensive approach to risk assessment that accounts for financial linkages between banks and other financial intermediaries. • Continue efforts to develop resolution plans and to undertake resolvability assessments so that important banks could be resolved effectively across borders. • Continue to actively participate in international negotiations on co- ordinated action to combat tax base erosion and profit shifting of multinational enterprises. Change domestic laws as necessary. 12
  13. 13. Raising productivity and fostering the diversification of the economy
  14. 14. Entrepreneurship
  15. 15. Raise investment in knowledge-based capital 15 Investment in knowledge-based capital, 2010 In percent of value-added of the business sector Source: OECD Science, Technology and Industry Scoreboard 2013. 0 5 10 15 20 25 30 35 Spain Italy Korea(2008) Portugal Australia Luxembourg Ireland CzechRepublic Austria Japan(2008) Germany Slovenia Netherlands Finland Canada(2008) UnitedKingdom Belgium Denmark France Sweden UnitedStates % Software and databases R&D and other intellectual property products Brand equity, firm-specific human capital, organisational capital
  16. 16. Raise R&D spending 16 R-D expenditure Gross domestic expenditure in percent of GDP Source: OECD(2014), "Main Science and Technology Indicators“. 0 0.5 1 1.5 2 2.5 2003 04 05 06 07 08 09 10 11 12 % Luxembourg OECD 0 0.5 1 1.5 2 2.5 2003 04 05 06 07 08 09 10 11 12 % OECD Luxembourg A. Total B. Business Entreprise
  17. 17. Strengthen cooperation between enterprises and institutes 17 SME collaboration on innovation In percent of product or process innovative firms, 2008-10 2011 for Australia, 2006-08 for Ireland, 2009-10 for New Zealand and 2009-11 for Switzerland. SME: Small and medium- sized enterprises. The OECD aggregate covers 30 countries in panel A and 28 in panel B. Source: OECD (2013), OECD Science, Technology and Industry Scoreboard 2013. 0 10 20 30 40 50 60 70 Australia Italy NewZealand Portugal Estonia Ireland Netherlands Switzerland Poland Spain Denmark Sweden Luxembourg France Germany OECD Norway UnitedKingdom Belgium Hungary Austria Finland A. Collaboration with higher education or public research institutions 0 5 10 15 20 25 30 35 Italy Spain Australia Germany Portugal NewZealand Poland Netherlands Switzerland Ireland France Hungary OECD Norway Belgium Sweden Finland Luxembourg Austria Estonia UnitedKingdom B. International collaboration
  18. 18. Enhance the potential of innovative industries • Better evaluate the effectiveness of public R&D spending and cluster policies. • Strengthen the cooperation between enterprises, University of Luxembourg and research institutes in Luxembourg and abroad. 18
  19. 19. Education and labour force participation
  20. 20. Improve high school completion 20 Successful completion of upper secondary programmes, 2012 Note: N: theoretical duration of the programmes. Countries are ranked in descending order of the successful completion of upper secondary programmes. Source: OECD (2014), Education at a Glance. See Annex 3 for notes (www.oecd.org/edu/eag.htm). 0 10 20 30 40 50 60 70 80 90 100 UnitedStates Estonia Sweden OECD Belgium Finland NewZealand UnitedKingdom Italy Chile Netherlands Spain Denmark France Norway Iceland Luxembourg % Completion after N years Completion after N+2 years
  21. 21. Raise female labour force participation 21 Female labour market participation rate, 2013 1. The labour force participation rate is defined as the ratio of the labour force to the working age population, expressed in percentages. Source: OECD Labour Force Statistics. 0 10 20 30 40 50 60 70 80 90 Turkey Mexico Italy Chile Korea Greece Hungary Poland Belgium SlovakRepublic OECD Luxembourg Ireland Japan CzechRepublic Slovenia France UnitedStates Israel EuroArea Spain Portugal Australia Austria Estonia UnitedKingdom Germany NewZealand Finland Canada Netherlands Denmark Norway Switzerland Sweden Iceland % 0 10 20 30 40 50 60 70 SlovakRepublic Hungary CzechRepublic Slovenia Estonia Poland Portugal Greece Korea Finland UnitedStates Sweden Israel France Spain Chile Turkey Iceland Denmark OECD Canada Luxembourg Mexico Norway Belgium EuroArea Italy Austria NewZealand Japan Ireland Germany Australia UnitedKingdom Switzerland Netherlands % A. Female labour force participation rate¹ B. Share of female part-time employment in total female employment
  22. 22. Nourish a high-quality labour force • In secondary education, reduce grade repetition, provide more school autonomy and better monitor education quality. • Increase enrolment in early childhood education with emphasis on low- income and foreign-language families. • Reduce disincentives for labour force participation of women by charging health care contributions for each spouse individually and introducing separate income tax assessment of spouses. 22
  23. 23. More Information… http://www.oecd.org/eco/surveys/economic-survey-luxembourg.htm OECD OECD Economics Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 23

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