Luxembourg Economic Forecast

Luxembourg Economic Outlook

June 30, 2020

The economy has seemingly taken a sharp hit in the first half of the year from lockdowns and social distancing measures. Official estimates suggest economic activity contracted by a quarter during the most intense period of confinement, from 23 March to 17 April, with the construction, hotel and catering, and retail sectors especially affected. Conditions likely remained dire through May as the unemployment rate remained stuck at April’s over five-year high, while business and consumer sentiment were mired deep in pessimistic territory despite improving slightly from April’s over one-decade lows. More positively, however, restrictions have been lifted gradually since late April, with bars and restaurants, as well as cinemas and sports venues allowed to reopen from 29 May, which should have supported the economy at the tail end of Q2.

Luxembourg Economic Growth

The economy is expected to contract this year as confinement measures constrain household and capital spending, while feeble global demand will depress the external sector. Fiscal and monetary stimulus measures should offer some support, however. FocusEconomics analysts see GDP contracting 6.0% in 2020, which is down 0.6 percentage points from last month’s forecast. For 2021, the panel sees GDP growth at 6.1%.

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Luxembourg Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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