The crisis in Ukraine would weigh heavily on Luxembourg
What consequences for Luxembourg in the event of war in Ukraine? Without even mentioning the human tragedy of a conflict in the Donbass, the Luxembourg population should expect an even greater rise in energy prices, following the European sanctions avoided on Russia. The country led by Vladimir Putin is indeed Luxembourg’s second largest supplier of natural gas (7,868.7 terajoules) behind Norway. Note that Luxembourg does not import gas from Ukraine.
Two strong sectors of the Luxembourg economy would also be particularly impacted: finance and heavy industry, analyzing the Chamber of Commerce for The essential. Since the first sanctions in 2014, the export of financial services between the Grand Duchy and Russia has been divided by three, from 104 million euros per year (2013) to 35 million (2020).
“The fear is that these exchanges will decrease even more,” explains Cindy Tereba, director of international relations. The fund industry and wealth management, two important poles of the financial center, would be the first concerned. All of this accompanied by “an upheaval in world stock markets”.
“Risk Markets”
Luxembourg industry also risks losing market share. Chemical industry products, plastics, wood pulp, common metals, electrical appliances, transport equipment, Luxembourg exported 407 million euros worth of goods to Russia in 2020 and 80 million euros worth of goods to Ukraine , especially base metals and electrical appliances.
But according to Cindy Tereba, “companies have prepared”, opposing Russia and Ukraine as “risky markets” since 2013. In addition to resilience capacities, the big names in local industry have notably determined their activities. Asked by The essentialArcelorMittal said it “has prepared contingency plans to protect personnel and, to the extent possible, assets”.
The steel giant says it is “very concerned” about the situation in Ukraine, and hopes “that peace and stability will be maintained”, but does not suffer from “any disruption” of its activities there to date. “Production and shipments are continuing as normal,” the band finished.
(Thomas Holzer/The Essential)
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