Luxembourg rises three places in global competitiveness ranking

Luxembourg has risen three places in a ranking assessing the competitiveness of economies around the world, regaining the position it held back in 2023.

The Grand Duchy rose to 20th place in the World Competitiveness Ranking 2025 published earlier this month, which ranked the economic strength of 69 countries across the globe. That was an improvement on last year, when it finished 23rd out of 67 nations examined.

The study is published annually by the International Institute for Management Development (IMD), a prestigious business school based in the Swiss city of Lausanne. It assesses areas such as efficiency of procedures, infrastructure and economic performance, using a mix of data and survey results with business executives.

Luxembourg was never outside of the top 15 of the list up until 2023, when it first fell to 20th place and dropped to its worst-ever position in 2024.

“The Grand Duchy has been overtaken by certain countries it previously consistently outperformed, such as Germany, Australia, and Qatar,” the Luxembourg Chamber of Commerce in a statement on Tuesday, expressing alarm that the country appears to be “settling” in the lower rankings “permanently”.

Although Luxembourg scored highly in some areas, such as in second place on environmental performance, the government “must ensure that environmental laws do not hinder business competitiveness,” the Chamber of Commerce said.

The country also saw improvements in the ‘business efficiency’ category – examining issues such as labour market and access to finance – where it rose three places in the latest ranking, but this was offset by a major drop in ‘business competitiveness’, which assesses areas such as domestic economy, international trade and employment.

After finishing consistently in the top ten since 2010, Luxembourg topped the business competitiveness category in 2022 after a strong post-pandemic economic performance. However, since then, the Grand Duchy has been in freefall as economic growth slowed, hitting 57th place last year before recovering to move up to 35th spot in the latest report.

The Chamber of Commerce has called on the government to implement five key reforms to reverse the trend, including stepping up defence efforts “as part of a comprehensive economic and industrial strategy”, building an “ecosystem” around artificial intelligence and taking action to “ensure the long-term sustainability of the social security system.”

Earlier this year, a survey by the country’s official statistics agency Statec revealed Luxembourg businesses believe the country’s industry is losing competitiveness when faced with rivals from outside the EU.

Following Luxembourg’s poor showing in last year’s ranking, the Economy Ministry said it was working on new laws to address many of the points raised, including the introduction of the once-only principle, which would mean that projects involving applications to numerous offices and administrations would require information to be submitted only once.

The coalition govermnent has also pressed ahead with the continued implementation of the Silence vaut accord (silence implies consent) principle, meaning that if the applicant does not receive a response from the administration within a certain period of time, the application is deemed to have been approved.

Switzerland came top of the IMD ranking this year, moving up one position from 2024 and swapping places with Singapore, which had been in top spot last year.