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Economy of Monaco

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Economy of Monaco
CurrencyEuro (EUR, €)
calendar year
Trade organisations
EUCU
Country group
Developed/Advanced High-income economy[1]
Statistics
PopulationDecrease 38,367 (31 December 2023)[2]
GDP
  • Increase $8.784 billion (nominal, 2022)[3]
  • $7.672 billion (PPP, 2015 est.)[4]
GDP growth
  • Decrease -13.01% (2020 est.)[4]
  • Increase 21.87% (2021 est.)[4]
  • Increase 11.1% (2022 est.)[4]
GDP per capita
  • Increase $240,862 (nominal, 2022)[5]
  • Increase $115,700 (PPP, 2015 est.)[4]
GDP by sector
Labour force
  • Increase 63,479 (2023)[6]
  • 47.9% employment rate (2016)[7]
Unemployment26.6% youth unemployment (2016 est.)[4]
All values, unless otherwise stated, are in US dollars.

The economy of Monaco is reliant on tourism and banking.[8] Monaco, situated on the French coast of the Mediterranean Sea, is a popular resort, attracting tourists to its casino and pleasant climate.

The Principality has successfully sought to diversify into services and small, high-value-added, nonpolluting industries. The state has no income tax and low business taxes and thrives as a tax haven both for individuals who have established residence and for foreign companies that have set up businesses and offices. The state retains monopolies in a number of sectors, including gambling, tobacco, the telephone network, and the postal service.[9][citation needed]

Denture adhesion rings made in Monaco, early to mid 20th century

Background

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Economic development was spurred in the late 19th century with the opening of the rail link to France and the Monte Carlo Casino. Monaco's economy is now primarily geared toward finance, services, and real estate.

Modern times

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Low taxes have drawn many foreign individuals to Monaco and account for around 75% of the $7.78 billion annual GDP income in (2021).[how?] Similarly, tourism accounts for close to 15% of the annual revenue, as the Principality of Monaco also has been a major center for tourism ever since the famed Monte Carlo Casino was established in 1856.

Financial and insurance activities, along with scientific, support-administrative, activities are the main contributors to the GDP of Monaco. Wholesale trades (10%), construction (9.1%) and real estate activities (7.8%) also contribute highly to the country's GDP.[10] Monaco real estate is known to be one of the most expensive in the world.[11][12][13][14][15] Banking sector of Monaco is rather large: in 2015 consolidated banking assets 8.42 times exceeded the country's GDP. Banks operating in Monaco traditionally specialize in private banking, asset and wealth management services. Wholesale trade, construction and real estate sectors come afterward in the ranking.[16]

An economic and customs union with France governs customs, postal services, telecommunications, and banking in Monaco. Before the euro, Monaco used the Monegasque franc, which itself was pegged to the French franc. Now part of the Eurozone, but not the EU, Monaco mints its own euro coins.

All residents pay tax in the form of 20% value-added tax on all goods and services.[17]

Monaco is noted for its activity in the field of marine sciences. Its Oceanographic Museum, formerly directed by Jacques-Yves Cousteau, is one of the most renowned institutions of its kind in the world. Monaco import and exports products and services from all over the world. There is no commercial agriculture in Monaco; it is 100% urban.

Tax haven

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Monaco levies no income tax on individuals. The absence of a personal income tax in the principality has attracted to it a considerable number of wealthy "tax refugee" residents from European countries who derive the majority of their income from activity outside Monaco;[18] celebrities such as Formula One drivers attract most of the attention, but the vast majority of them are less well-known business people.

In 2000, a report by the French parliamentarians, Arnaud Montebourg and Vincent Peillon, alleged that Monaco had lax policies with respect to money laundering, including within its famed casino, and that the government of Monaco had been placing political pressure on the judiciary so that alleged crimes were not properly investigated.[19]

In 1998, the Organisation for Economic Co-operation and Development (OECD) issued a first report on the consequences of the tax havens' financial systems. Monaco did not appear in the list of these territories until 2004, when OECD became indignant regarding the Monegasque situation and denounced it in its last report, as well as Andorra, Liechtenstein, Liberia and the Marshall Islands, underlining its lack of co-operation as regards to financial information disclosure and availability.

In 2000, the Financial Action Task Force on Money Laundering (FATF) stated: "The anti-money laundering system in Monaco is comprehensive. However, difficulties have been encountered with Monaco by countries in international investigations on serious crimes that appear to be linked also with tax matters. In addition, the FIU of Monaco (SICCFIN) suffers a great lack of adequate resources. The authorities of Monaco have stated that they will provide additional resources to SICCFIN." The Principality is no longer blamed in the 2005 FATF report, as well as all other territories. In 2003, the International Monetary Fund (IMF) has identified Monaco, along with 36 other territories, as a tax haven but Monaco came out of that list in 2009.[20][21][22]

In June 2024, due to concerns about money laundering and terror financing, the FATF added Monaco to a list of countries "under increased monitoring." In a statement, the FATF said that the country needed to "address strategic deficiencies."[23]

National enterprises

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Monaco's economy is also based on national companies, which combined produce over a billion in profit every year. Among the most profitable and well-known companies outside Monaco are the Société des bains de mer, the bank UBS Monaco, the auction house Monaco Legend Group and the media conglomerate Lagardère News.[24][25]

Companies

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In 2022, the sector with the highest number of companies registered in Monaco is Finance, Insurance, and Real Estate with 4,497 companies followed by Services with 1,895 and 1,184 companies respectively.[26]

Public finances

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In 2023 Monaco recorded government revenues of 2.19 billion EUR and expenses of 2.07 billion EUR, for a 126 million EUR budget surplus.[27]

The state's fiscal reserves, the Constitutional Reserve Fund (CRF), reached a balance of 7 billion EUR in 2023, up from 5.7 billion EUR in 2019.[28]

See also

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Notes

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References

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  1. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  2. ^ "Population census". monacostatistics.mc. Monaco Statistics. Retrieved 3 October 2024.
  3. ^ "GDP (current US$) – Monaco". data.worldbank.org. World Bank. Retrieved 3 October 2024.
  4. ^ a b c d e f g "Monaco". cia.gov. Central Intelligence Agency. Retrieved 3 October 2024.
  5. ^ "GDP per capita (current US$) – Monaco". data.worldbank.org. World Bank. Retrieved 3 October 2024.
  6. ^ "Employment indicators 2023". monacostatistics.mc. Monaco Statistics. Retrieved 3 October 2024.
  7. ^ "Employment to population ratio, 15+, total (%) (national estimate) – Monaco". data.worldbank.org. World Bank. Retrieved 3 October 2024.
  8. ^ "Monaco". cia.gov. Central Intelligence Agency. Retrieved 3 October 2024.
  9. ^ "Tobacco and Matches Board / Ministry of Finance and Economy / The Government / Government & Institutions / Portail du Gouvernement – Monaco".
  10. ^ "Economy and Finance / IMSEE – Monaco IMSEE". www.monacostatistics.mc.
  11. ^ "Monaco is the World's Most Expensive Place to Buy a Home for the Fourth Year in a Row". April 2021.
  12. ^ "monaco most expensive real estate forbes – Google Search". www.google.com.
  13. ^ "Monaco: Paradise City".
  14. ^ "The only place with more expensive property than Hong Kong? Monaco". 10 August 2021.
  15. ^ "Savills Monaco | Monaco still the most expensive real estate market in the world". 24 July 2017.
  16. ^ "GDP / Economy and Finance / IMSEE – Monaco IMSEE".
  17. ^ Genta, Evelyne (Monaco Ambassador to the UK) Monaco Might Not Charge Residents Income Tax, But it's No Tax Haven The Telegraph 16 Feb 2010
  18. ^ Neate, Rupert. "Monaco builds into the Med to house new throng of super-rich". The Guardian. Retrieved 15 May 2024.
  19. ^ Basso, Davide. "France still sends €100 million a year to 'millionaire haven' Monaco". Euractiv. Retrieved 15 May 2024.
  20. ^ "Paradis fiscaux: Monaco retiré de la liste grise de l'OCDE, la Suisse devrait suivre". 24 September 2009.
  21. ^ "Huit pays disparaissent de la liste des paradis fiscaux". lecho.be. Retrieved 2023-05-11.
  22. ^ "Common EU list of third country jurisdictions for tax purposes".
  23. ^ "Monaco added to money laundering 'gray list'". Deutsche Welle. Retrieved 4 July 2024.
  24. ^ "Industry Breakdown of Companies in Monaco". HitHorizons.
  25. ^ "The Monegasque economy in 2022: 8 key figures". 16 March 2023.
  26. ^ "Industry Breakdown of Companies in Monaco". HitHorizons.
  27. ^ Monaco Statistics (May 2024). "Public finances: 2023" (PDF). p. 1/2. Retrieved 2024-11-23.
  28. ^ Monaco Statistics (May 2024). "Public finances: 2023" (PDF). p. 2/2. Retrieved 2024-11-23.
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