Credit: Eurostat
Despite a mostly favourable economic situation, prospects for expansion in Luxembourg are in decline, according to a recent Statec report.
As 2019 approaches, the economic situation remains favourable for the Grand Duchy. However, expansion prospects are set to continue to decline, particularly in connection with the deterioration of the international economic environment. GDP growth in Luxembourg should thus rise to 3% per year this year and next.
Economic growth in 2016 and 2017 was revised downwards, as technical events weighed on the performance of certain businesses, despite a positive economic context. Estimates for the first two quarters of 2018 nevertheless showed an expansion momentum close to 3% year-on-year. While the confidence of European economic players declined significantly in 2018, the morale of Luxembourg businesses and households seemed to be more resilient.
That said, the ongoing European slowdown, which is expected to continue into 2019, would result in less external demand for Luxembourg. Financial activity should also suffer from the reversal of equity markets. GDP growth is thus forecast to be lower over the next two years, reaching an estimated 3% per year over this period rather than the current 4% per year. It should be noted, however, that the margin of error surrounding this forecast is much greater than usual.
