Credit: IDEA Foundation
The IDEA Foundation has reissued its Economic and Social Dashboard publication, revealing that despite public support measures, the Luxembourg economy continued to show signs of a slowdown in the second half of 2023 following an initial decline in activity.
Activity slowed again at the end of the year, but at an overall slow pace, in particular due to the drop in demand and financing conditions which became particularly tough.
The volume of total gross value added generated by economic activity in Luxembourg saw a decrease of 0.1% in the third quarter compared to the second quarter of 2023. The finance and transport sectors recorded sharp declines, respectively down 3.4% and down 6%, thus explaining most of the contraction in value added.
The construction sector was strongly impacted, particularly with the number of bankruptcies increasing. The current level of real estate loan rates seems to be stabilising, but it does not reverse the downward trend in loans granted.
The slowdown in salaried employment in the Luxembourg labour market is increasing. The stock of vacant positions has decreased by 40% in one year. The number of unemployed people with higher education is increasing more significantly, seeming to indicate a slowdown in the service sector, but also a certain mismatch between labour supply and demand.
STATEC noted it expects a decline in GDP of 1% in 2023, and growth of 2% this year.
In the third quarter of 2023, the volume of total gross value added generated by economic activity in Luxembourg saw a decrease of 0.1% compared to the 2nd quarter of 2023. The finance and transport sectors recorded sharp declines, respectively down 3.4% and down 6%, thus explaining most of the contraction in value added.
Industry and ICT performed well in terms of volume, the IDEA Foundation noted, with increases in value added of 3.2% and 4.6% respectively over one quarter. On the other hand, the construction sector continues to suffer the effects of monetary policy, presenting a drop in added value which is certainly less, but reinforces the drop observed in the previous quarter (down 3.6% in the second quarter of 2023 compared to in the first quarter of 2023). The public sector was able to generate positive added value during this quarter (up 1%), as did the leisure sector (up 1.7%).
