Luxembourg has a strong and stable economy. Evidence shows that Luxembourg has a strong stable political environment represented through alliances and strong connections(Fitch ratings, 2023). Luxembourg’s economy is quite advanced and works jointly with several international organizations. One of Luxembourg’s main attractions for business is its’ prime location which lets businesses test the European market very closely. Luxembourg has a multicultural population that possesses a variety of skills in different industries. Luxembourg’s economy demonstrated resilience during the COVID-19 pandemic, therefore 2020 Gross domestic product (GDP) only decreased by 1.3 percent. Luxembourg’s economy recovered stronger and in 2021 made a comeback with an increased growth rate of 6.9 percent. A slowdown in the economy of Luxembourg is predicted though with a GDP decline of 1.5% this year compared to 2.0% in the previous year, due to high-interest rates and increased inflation(Fitch ratings, 2023).
The current currency in Luxembourg is the Euro (€) which was officially adopted and recognized as the official currency of Luxembourg in 2002. The euro existed in Luxembourg three years prior, in 1999 but was only recognized as the official currency in 2002(europa.eu, 2023). The currency in Luxembourg (euro) in relation to the currency in the United States(US dollar) is that 1 EUR is equivalent to 1.057594 USD(Forbes, 2023). Luxembourg reigns as the largest investment center in Europe and the second largest in the world with over € 4.3 trillion in resources under administration (AUM). Luxembourg is also the global hub for cross-border investments and a gateway for Chinese ventures and investments(Luxembourg for finance). Luxembourg is used by fund promoters as a platform and a way to shelter funds that are then transported to important investors, retailers, and high net worth. There are over 3,600 investment funds representing over 14,500 fund units in Luxembourg.
