An International Monetary Fund (IMF) mission led by Kazuko Shirono conducted discussions with the Principality of Liechtenstein for the 2025 Article IV Consultation from January 7 to January 20. The mission released a statement highlighting several key aspects of Liechtenstein's economic situation and policy outlook.
Liechtenstein, which became an IMF member in October 2024, is participating in its first Article IV consultation. The country has maintained high per capita income, no fiscal deficits since 2013, virtually no public debt, and significant fiscal buffers. Economic activity relies on specialized manufacturing and financial services focused on private banking and wealth management.
The statement noted recent economic volatility due to consecutive shocks. The economy contracted during the COVID-19 pandemic but rebounded in 2021. However, it faced another contraction in 2022-23 due to export disruptions and impacts from Russia's war in Ukraine. Despite these challenges, unemployment remained lower than the EU average.
Economic recovery is expected to continue moderately into 2025 with growth driven by external demand and the financial sector. Inflation is projected to stay low, aligning with Switzerland's rates.
Fiscal policy remains conservative with continued surpluses anticipated. The budget for 2025 includes increased spending on investment projects such as a national hospital while maintaining a surplus of about three percent of GDP.
The financial sector strategy has emphasized compliance with international standards post-global financial crisis. Key reforms include laws governing fiduciary sectors and adherence to OECD initiatives. The banking sector remains liquid and well-capitalized despite pressures on profitability.
The report highlighted structural reforms needed to address skills shortages and increase labor supply, particularly among women and older workers. It also stressed the importance of preparing for future pension system financing gaps due to aging demographics.
Climate reform efforts have been recognized, with Liechtenstein meeting its Kyoto target for greenhouse gas emissions reduction and setting ambitious future goals for climate neutrality by 2050.
Lastly, addressing data gaps in macroeconomic statistics was identified as a priority area for improvement, supported by additional resources allocated to the Office of Statistics.
The IMF team expressed gratitude towards Liechtenstein authorities for their cooperation during this consultation process.