Economy of Liechtenstein

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Economy of Liechtenstein
Vaduz Zentrum.jpg
Currency Swiss franc (CHF)
Statistics
GDP Decrease$3.2 billion (PPP, 2009 est.)
GDP growth Decrease-0.5% (Real, 2009 est.)
GDP per capita Decrease$89,400 (PPP, 2000 est.)
GDP by sector agriculture: 7.1%; industry: 42.8%; services: 50.1% (2008)
Inflation (CPI) Decrease0.2% (CPI, 2011)
Population
below poverty line
n/av
Gini coefficient n/av
Labour force 35,260, 51% of whom commute daily from Austria, Switzerland, or Germany (2012)
Labour force
by occupation
agriculture: 0.8%; industry: 39.4%; services: 59.95% (2010)
Unemployment Increase2.5% (2011)
Main industries electronics, metal manufacturing, dental products, ceramics, pharmaceuticals, food products, precision instruments, tourism, optical instruments
External
Exports Increase$3.76 billion (2011 est.)
Export goods small specialty machinery, connectors for audio and video, parts for motor vehicles, dental products, hardware, prepared foodstuffs, electronic equipment, optical products
Main export partners n/av
Imports Increase$2.218 billion (2011 est.)
Import goods agricultural products, raw materials, energy products, machinery, metal goods, textiles, foodstuffs, motor vehicles
Gross external debt 0% (2001) debt holder of Switzerland, Austria and US
Public finances
Public debt n/av
Revenues $1.29 billion (2011 est.)
Expenses $1.372 billion (20011 est.)
Credit rating Standard & Poor's:1
AAA (Domestic)
AAA (Foreign)
AAA (T&C Assessment)
Outlook: Stable2

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars

Low business taxes - the maximum tax rate is 20% - and easy incorporation rules have induced about 73,700 holding or so-called letter box companies to establish nominal offices in Liechtenstein, providing 30% of state revenues. The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 85% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between European Free Trade Association (EFTA) and EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe.

History

Since the signing of the Customs Treaty in 1919, Liechtenstein and Switzerland have represented one mutual economic area. Therefore, the borders between those states are open. The country also uses the Swiss franc as its national currency, and Swiss customs officers secure its border with Austria. Currently there are 21 Swiss border guards stationed in Liechtenstein and 20 Austria border guards securing its border (as of 2011).

Liechtenstein is a member of EFTA, and joined the European Economic Area (EEA) in 1995 in order to benefit from the EU internal market. The capitalist economy and tax system make Liechtenstein a safe, trustworthy, and success-oriented place for private and business purposes, especially with its highly modern, internationally laid-out infrastructure and nearby connections to the whole world.

The Principality of Liechtenstein has gone through economic and cultural development in the last 40 years like no other Western country. In this short period, Liechtenstein developed from a mainly agricultural state to one of the most highly industrialized countries in the world.

Foreign trade

An office of the Hilti Corporation in Hong Kong pictured in March 2010, an example of Liechtenstein's export economy

Besides its efficient industry, there also is a strong services sector. Four out of 10 employees work in the services sector, a relatively high proportion of whom are foreigners, including those who commute across the border from the neighboring states of Switzerland, Austria and Germany. Industrial exports more than doubled in 20 years from $1.21 billion (SFr. 2.2 billion) in 1988 to $2.9 billion (SFr. 4.6 billion) in 2008. Some 15.7% of Liechtenstein goods are exported to Switzerland, 62.6% to the EU, and 21.1% to the rest of the world. Liechtenstein imports more than 85% of its energy requirements from the Swiss. While Liechtenstein produces only 15% of its energy requirements.

For the last 2 years, the United States has been the most important export market for Liechtenstein, totaling $561 million (SFr. 876 million); Germany is second, with $479 million (SFr. 748 million) worth of imports, and Switzerland third, with $375 million (SFr. 587 million). France and Italy were able to maintain their positions, while Austria and the United Kingdom have been overtaken by Taiwan and Japan.

About 32% of the country's revenues are invested in research and development, one of the driving forces of the success of Liechtenstein's economy. Total R&D spending in 2000 rose by 20.7% to approximately $140 million (213 million francees).

Banking and finance

The Principality of Liechtenstein also is known as an important financial centre, primarily because it specializes in financial services for foreign entities. The country's low tax rate, loose incorporation and corporate governance rules, and traditions of strict bank secrecy have contributed significantly to the ability of financial intermediaries in Liechtenstein to attract funds from outside the country's borders. The same factors made the country attractive and vulnerable to money launderers, although late 2009 legislation has strengthened regulatory oversight of illicit funds transfers.

Liechtenstein has chartered 17 banks, three non-bank financial companies, and 71 public investment companies, as well as insurance and reinsurance companies. Its 270 licensed fiduciary companies and 81 lawyers serve as nominees for, or manage, more than 73,000 entities (primarily corporations, institutions, or trusts), partly for non-Liechtenstein residents. About one-third of these entities hold the controlling interest in other entities, chartered in countries other than Liechtenstein. The Principality's laws permit the corporations it charters to issue bearer shares. Until recently, the Principality's banking laws permitted banks to issue numbered accounts, but new regulations require strict know-your-customer practices for all accounts.

Statistics

  • GDP (PPP): $4.826 billion (2009)
  • GDP - real growth rate: 3.8%% (2008)
  • GDP (PPP) - per capita: purchasing power parity - $141,100 (2008)
  • Inflation rate (consumer prices): 0.7% (2011)
  • Labor force: 35,440 of whom about 10,440 are natives 7,550 are foreigners; 17,450 commute from Austria, Switzerland, and Germany to work each day (2008)
  • Labor force - by occupation: agriculture: 8%; industry: 41%; services: 51% (31 December 2008)
  • Unemployment rate: 1.5% (December 2007)
  • Currency: Swiss franc (CHF)
  • Exchange rates: Swiss francs per US dollar - 1.3467 (2003), 1.5586 (2002), 1.6876 (2001), 1.6888 (2000), 1.5022 (1999)
  • Fiscal year: calendar year

Budget

  • revenues: $420.8 million
  • expenditures: $420.1 million, including capital expenditures of $NA (2000 est.)

Industries

electronics, metal manufacturing, textiles, ceramics, pharmaceuticals, food products, precision instruments, tourism

  • Industrial production growth rate: N/A

Electricity

  • production by source
    • fossil fuel: 3330 MWh (3.12%)
    • hydro: 76166 MWh (94.2%)
    • nuclear: none (0%)
    • solar/wind: 1361 MWh (2.68%)
  • Electricity - production: 80,105 MWh (2010)
  • Electricity - consumption:about 350,645 MWh (2010)
  • Electricity - exports: none
  • Electricity - imports: about 270,540 MWh (2010)

Agriculture

  • Products

wheat, barley, corn, potatoes; livestock, dairy products

Exports

Imports

See also

References

  1. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011. 
  2. ^ Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 31 May 2011. 

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