Luxembourg has experienced a severe recession, as it was heavily exposed to the fall in world trade and the international financial crisis. Unemployment has risen and the fiscal position has deteriorated. This follows a long period of continuous and rapid economic expansion during which living standards rose impressively and the economy was transformed by the growing financial centre and large flows of cross-border and migrant workers. While there are encouraging signs of recovery, the future growth path is likely to be weaker than in the recent past reflecting the sluggish international recovery, structural factors and a loss of competitiveness.