A week after Standard & Poor’s decision, credit rating agency DBRS has just confirmed its AAA rating for Luxembourg, giving it a stable trend.

In its analysis, DBRS stressed in particular the strength of the country's institutions and the positive development of Luxembourg’ economy, which is expected to grow by close to 4% in 2017 and 2018. The agency also noted that per capita GDP in Luxembourg, with purchasing power parity, is 2.3 times higher than the euro area average. In terms of public finances, DBRS believes that a balanced budget will be maintained and that the medium-term budgetary objective will continue to be respected even after the implementation of a tax reform that should strengthen domestic demand.

Risks, which DBRS categorised as “controllable”, include the limited degree of diversification of the economy, for which the financial centre continues to be the driving force, the vulnerability of the economy to external economic shocks, and uncertainties related to the future development of international taxation. 

In line with other rating agencies, DBRS also highlighted the challenges associated with the costs of ageing. As for Brexit, the agency believes that it could have a positive impact, due to the opportunities associated with UK companies wishing to relocate their business to Luxembourg.

Pierre Gramegna, Minister of Finance welcomed the validation of Luxembourg's economy. 

"This new confirmation of the AAA is an encouraging sign that confirms that the government's action continues to bear fruit and that optimism is in prospect for the development of the economy Luxembourg. I also welcome the fact that the ADEM has just announced that the unemployment rate has reached its lowest level since August 2012. 

“However, this positive development should not be relieved. On the contrary, it is important to continue investing in our infrastructure and to continue to modernise our legal and regulatory framework while ensuring the soundness of our public finances in order to lay the foundations for a Qualitative development in the years to come."