September 16, 2019

The Monaco economy

Monaco is very well-connected – 22km away from Nice Airport which offers daily flights to the world’s major cities and is 6-7 minutes away by helicopter from the Principality.  Over 130 different nationalities (and their subsequent business connections) tie Monaco to the rest of the world and, over more than 100 years, the country has successfully integrated itself into the global economic system.

Monaco is an advanced economy with its citizens enjoying the second highest GDP per capita in the world, fractionally behind Liechtenstein (Sources: National Accounts Main Aggregates Database, United Nations Statistics Division). Monaco has a diverse economy employing over 50,000 people (source: IMSEE) across a variety of sectors including private banking, insurance, gambling, high-value manufacturing and construction, wealth management, biosciences, professional services, insurance, real estate, law, shipping, transport, freight, and accountancy (sources: IMSEE SIC codes). 

Expressed in economic growth, Monaco has outperformed most European competitors in the years since 2005 – it has enjoyed five times the level of growth of the EuroZone (source: World Bank). 

Monaco is one of the few countries in the world with no sovereign debt and whose government finances continue to show a healthy surplus year after year despite its comparatively low levels of taxation (source: Monaco Government) – read more about in one of our special articles (link to article row 17). Careful financial management has helped Monaco have an inflation rate around a half lower than the EU since 1991 (source: World Bank).

In this article, Azurite Property examines:

  • the facts about the Monaco economy
  • the diversity of the Monaco economy
  • the financial sector
  • scientific and technical services sector
  • the construction sector
  • the wholesale trade
  • real estate activities in Monaco
  • public-sector-generated activity
  • accommodation and food service sector in Monaco
  • Monaco’s bustling retail trade
  • the dynamic manufacturing, mining, and quarrying sectors
  • the information and communication businesses of Monaco
  • the transportation and storage sector

Monaco economy facts

The country uses the Euro as its currency and it is a member of the European Union trade zone although not a member of the EU itself. 

Until the beginning of the twentieth century, the economy was primarily dependent on the business activities of the publicly-owned Société des Bains de Mer, which owns and manages the Hotel de Paris, the Opera de Monte-Carlo, and the Monte Carlo Casino

Since that point, the Monegasque government have encouraged economic growth in the country with the development of a sophisticated framework to attract both private enterprise and foreign capital.

A diverse economy

The strategy was a success. The country’s economy is very divergent and it has diversified across a wide range of different sectors. This spreading of risk provided protection for Monaco during the Great Recession towards the end of the 2000s and it also its rapid growth after the world economy began to recover.

In 2015, 47,504 employees across 12 different sectors added over €5.6bn worth of value to the economy from over €14.5bn worth of sales. Below, we detail the level of input each sector contributed to the Monaco economy during that year:

Year 2015Value to economyEmployeesTurnover
Financial and insurance activities€948,800,0003,720€1,714,200,000
Scientific and technical activities, administrative and support service activities€841,300,0002,345€1,541,800,000
Construction€718,600,0002,763€1,319,100,000
Wholesale trade€541,800,0005,756€4,590,300,000
Real estate activities€489,800,0002,872€482,400,000
Public administration, education, human health, and social work activities€404,100,0001,533€88,800,000
Accommodation and food service activities€374,400,0004,309€667,400,000
Retail trade€333,800,0001,939€1,430,100,000
Manufacturing, mining, and quarrying€274,100,00010,180€963,200,000
Other service activities€266,500,0007,062€695,400,000
Information and communication€250,300,0001,193€639,900,000
Transportation and storage€199,400,0003,832€551,200,000
Total€5,642,900,00047,504€14,683,800,000

The financial sector

The financial sector is the largest sector within the Monaco economy, comprising 11.6% of its size but adding 16.8% of value. Monaco has long been home to many international banks, financial services companies, and credit institutions. In 2007, new legislation and a refreshed regulatory framework was enacted to protect investors and develop the country’s financial services provision (source: CCAF).

At the end of December 2017, the Monaco financial market featured:

  • €114 billion deposited in Monegasque banks (deposits and securities)
  • €16 billion assets managed / management advice by foreign funds.
  • €16 billion assets under discretionary portfolio management
  • €17.4 billion assets under advisory management
  • €4.6 billion assets managed by 56 Monaco funds
  • 2,903 banking and financial sector employees
  • 31 banks, 29 of which accredited by the CCAF
  • 59 financial services companies

Assets managed by Monaco’s financial sector have doubled in the last 15 years given that the Principality’s laws and regulations have given rise to a very high standard of professionalism backed up by a quality infrastructure. Around 70% of the assets managed by the industry belong to non-residents from the Asia-Pacific region, Latin America, the Middle East, sub-Saharan Africa, and across Europe. (source: European Banking Federation)

Banks are also supervised by the Autorité de Contrôle Prudentiel [ACP] (Prudential Supervisory Authority) and are therefore subject to the same prudential and regulatory rules as French banks.

Monaco has a well-established system of financial regulation and four bodies which manage the enforcement of the relevant laws. 

The CCAF (Commission de Contrôle des Activités Financières) (Financial Activities Supervisory Commission) oversees asset management on behalf of third parties, management consultancy businesses, the transmission and receipt of orders, and the management of foreign or Monegasque funds. The CCAF is also supported by the Autorité des Marchés Financiers (AMF), the French market regulator.

AMAF (Association Monégasque des Activités Financières) (Monaco Association for Financial Activities) issues the necessary certificates for those qualified employees wishing to working within financial institutions based in Monaco. Its membership is made up of over one hundred mutual fund management companies, asset management companies, financial management companies, and banks. It represents its members in dealing with the Monegasque public authorities and it is responsible to take any action necessary to promote the development of the banking sector within the Principality.

AMCO (Association Monégasque des Compliance Officers) (Monegasque Association of Compliance Officers) was founded at a point of time during which, both internationally and nationally, anti-money-laundering standards were being improved. AMCO’s aim was to bring all compliance officers working with Monegasque financial institutions who were later joined by compliance officers of the country’s authorised fund management companies.

SICCFIN (Service d’Information et de Contrôle sur les Circuits Financiers) also supports the government and private sectors in the fight against money laundering as well as corruption and terrorist finance. Members receive and process any reports of suspicious transactions and then send those reports to an authorised person for future investigation and action.

Scientific and technical activities, administrative and support service activities

Monaco has, for many decades, sought to continually widen the scope of economic activities which take place within the country. One area in which it can claim a great deal of success is in the expansion of the scientific and technical activities, administrative and support service activities sector.

This broad sector includes all business activities which need the deployment of scientific and specialized techniques requiring a high level of training and providing specialized knowledge and skills to users, as well as all the various activities to support general business activities, for example accountants, notaries, architects, travel agencies, temporary agencies, and so on.

The breakdown of activity in this sector was as follows:

Sector (2017 figures)Turnover
Activities of head offices including management consultancy€335.9m
Architecture and engineering activities, technical testing and analysis€192.9m
Activities of travel agencies, tour operator reservation service and related activities€173.9m
Administrative activities and other support service activities€155.5m
Employment-related activities€132.1m
Other related activities€417.8m

Construction

The construction sector in Monaco is significant. Under IMSEE rules, economic activity included in this classification include general construction and specialized construction activities for buildings and civil engineering (new construction projects, renovations, repairs, additions and alterations, and installation of prefabricated buildings). It also includes real estate development activities if the projects worked on meet the necessary financial, technical, and human resources requirements necessary to complete real projects for later sale.

The construction sector varies from year to year when expressed in turnover because of the stop-start nature of new developments within the Principality. In some years, a handful of new properties comes to market and this affects the size of real estate development and its contribution to the overall construction sector turnover. For example, there were 195 new residential units which came to market in 2015 followed by zero in 2016.

Sector (2015 figures)Turnover
Real estate development€557.0m
Other specialized construction activities€498.5m
Construction of other civil engineering works€264.7m
Electrical installation work, plumbing and other construction installation€201.1m
Finishing work€146.5m
Other sectors€86.4m

Wholesale trade

The wholesale or inter-trade sector comprises all companies which buy and/or sell goods and services exclusively to other businesses or to professional buyers. In IMSEE’s methodology, this sector includes wholesale trade on own account or on behalf of third parties (commission-bearing trade) related to domestic trade activities or international wholesale trade (import/export activities).

Industrial and trade wholesale includes companies involved in the sale of machinery, industrial equipment, ships and aircraft, and the wholesale/business to business trading of pharmaceuticals.

Sector (2015 figures)Turnover
Wholesale of food, beverages and tobacco€1,474.9m
Wholesale trade intermediaries€1,353.0m
Wholesale of household goods€812.7m
Wholesale of other industrial equipment€525.3m
Other specialized wholesale€276.0m
Other sectors€129.9m

Accommodation and food service activities

The Accommodation and Catering sector includes the provision of accommodations for short stays for visitors and other travellers as well as and the provision of complete meals for immediate consumption. The Accommodation and Catering sector does not include the preparation of meals and drinks that are not intended for immediate consumption or that are sold through independent distribution channels such as retailers or wholesalers.

Sector (2017 figures)Turnover
Hotels and similar accommodation€451.7m
Restaurants and mobile food service€166.5m
Catering and other food services€12.1m
Drinking places€11.0m

Retail trade

IMSEE define the retail trade as the sale to the public of new or used goods – it does not include restaurants, bars, hairdressing salons, etc. The sale and repair of automobiles and motorcycles are included in the retail trade calculations but not the wholesale trade.

The retail sector employs just short of 1,950 people in 2017 delivering €333,800,000 worth of value on a total turnover of €1,430,100,000. Below, please see the division in the number of retail outlets by whether they trade or repair in motor vehicles or motorcycles.

Sector (2017 figures)%age of market
Retail trade, except of motor vehicles and motorcycles73.6%
Trade and repair of motor vehicles and motorcycles16.6%

Manufacturing, mining, and quarrying

The manufacturing, mining, and quarrying sector covers companies in the following trades – the manufacturing, mining and other activity at scale which processes raw materials or material which has already undergone one or more processing technique or the release of contained energy. Other included activities are the production and distribution of electricity, gas and water, sanitation and crafts.

In 2017, the latest year for which figures are available, combined turnover from Monegasque companies in the sector increased by 1.1%.

Sector (2017 figures)Turnover
Manufacture of rubber and plastic€291.2m
Chemical industry€142.4m
Pharmaceutical industry€46.0m
Garment Industry€44.8m
Other sectors€323.2m

Information and communication

Information and Communication-sector businesses produce and distribute information products and cultural products, provide the means necessary to transmit or distribute these products as well as data or communications. They also provide activities related to information technology, data processing services and other information services.

The information and communications sector employed 1,193 people in 2017 delivering €250,300,000 worth of value on a total turnover of €639,900,000. Below, please see the percentage of the information and communications market occupied by each major subsector.

Sector (2017 figures)%age of market
Production of video films and television programs, sound clip recording, and music publishing44.2%
Telecommunications36.0%
Programmatic IT, consultancy, and related activities10.8%
Other9.0%

Transportation and storage

The transport and storage economic sector embraces transport (scheduled and unscheduled), passengers and goods by rail, road, pipeline, water or air and associated activities including as infrastructure operations transportation, cargo handling, storage, and so on. Transport and storage also includes transport equipment rental with a driver or a pilot, as well as post and courier activities. 

These include transport of letters, packages and parcels out the activities covered by the postal monopoly (Post Monaco is part of France, its workforce and results are not recorded in the Principality), and local delivery of services and messaging.

The transportation and storage sector is the smallest of the twelve economic supersectors employing just short of 4,000 people in 2015 delivering €199,400,000 worth of value on a total turnover of €551,200,000. Below, please see the updated figures from IMSEE for the 2017 transportation and storage sector.

Sector (2017 figures)%age of market
Storage and auxiliary transport services73.6%
Land transport and transport via pipes16.6%
Air transport5.2%
Transport by water4.1%
Post and courier0.5%

Doing business in Monaco and the Monaco economy


This is one of Azurite Property’s series of articles on economic and business matters in Monaco. Other articles include:
• GDP, inflation, and sovereign debt in Monaco (link to article row 16)
• Taxation in Monaco (link to article row 17)
• Forming a business in Monaco (link to article row 18)
• Monaco’s tax treaties with the rest of the world (link to article row 21)
• Why Monaco is not a corporate tax haven  (link to article row 25)

To find out more about Azurite Property or to request our 2019 Monaco Report download, please do get in touch.

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