For the latest updates on the key economic responses from governments to adress the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Liechtenstein, whose economy is heavily dependent on the financial and banking sectors (around one-third of GDP), has the highest GDP per capita in the world by a large margin ahead of Luxembourg and Qatar (UN Statistics). Its high exposure to international markets and small population (39.3 thousand people in 2021) are sources of volatility. As a small and open economy, Liechtenstein was particularly affected by the slump in the global economy in 2020 but recovered quickly on the back of a strong rebound in global trade. The generally high sensitivity of Liechtenstein’s economy vis-à-vis the global business cycle suggests a pronounced impact in case of a global recession.
Liechtenstein’s public finances are characterised by virtually zero debt and large financial reserves. The country has recorded budget surpluses since 2014, and even in 2020, with pandemic-related expenses, the general government level still had a surplus of CHF 445 million, which is approximately 7.5% of its GDP. The shortfall in revenue caused by the pandemic, as well as the expenses of the government's support packages, were effectively offset by a one-time profit tax revenue of about CHF 300 million. The budget balance remained significantly positive in 2021, with a surplus of CHF 224 million or about 3.5% of GDP (data Financial Market Authority – FMA). Net assets of the public sector amounted to CHF 9.4 billion at the end of the year 2020 (i.e. more than 140% of GDP), of which CHF 3.9 billion were held by social insurances (41%), CHF 3.5 billion at the state level (37%), and the remaining CHF 2.0 billion (22%) at the community level. While the public sector has virtually no debt and large financial reserves, the non-financial corporate sector is characterised by high equity and low debt levels, also due to corresponding tax incentives; so that private indebtedness is highly concentrated in the household sector (at approx. 122 % of GDP at the end of 2021 – FMA). According to the latest data from the Office of Statistics, agriculture accounts for 0.2% of GDP, industry accounts for 41.7% and services for 58.1% of GDP. Main agricultural products include wheat, barley, corn, potatoes, livestock, and dairy products. Industrial production ranges from electronics, metal manufacturing, dental products, ceramics, pharmaceuticals, and food products to precision instruments, tourism, and optical instruments. Liechtenstein's business model faced challenges as investigations after the recession of 2008 exposed the role of Liechtenstein as a tax haven. This scandal, compounded by the financial crisis that followed, led to a decrease in the value of assets managed by the country. The country has since stepped up its efforts to shed its reputation as a tax haven and has committed to complying with global standards of transparency, eliminating its banking secrecy laws and thus being removed from the OECD's grey list of Non-Cooperative Countries. Liechtenstein was officially removed from the EU's grey list in October 2018. The country has implemented a number of bilateral agreements with regard to taxation and financial crimes, including with the United Kingdom and the United States.
Despite Liechtenstein's high level of business cycle volatility, the country has managed to maintain its employment and business activity quite effectively over the past few decades. As of the end of 2021, Liechtenstein's total employment stood at 41,352 employees, which actually exceeds the number of inhabitants (39,315). More than half of these employees are commuters who mostly reside in Switzerland and Austria, as Liechtenstein was given an exception to the EU's agreement on the free movement of persons, enabling the country not to grant residence permits to its workers.
|Swiss Franc (CHF) - Average Annual Exchange Rate For 1 MUR
Source: World Bank - Latest available data.
|Breakdown of Economic Activity By Sector
|Value Added (in % of GDP)
Source: World Bank - Latest available data.
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
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Latest Update: November 2023