Luxembourg Economic Forecast

Luxembourg Economic Outlook

May 28, 2019

Available data paints a mixed picture for the economy in the first quarter of the year, on the heels of Q4 2018’s deceleration. Household spending likely gathered momentum in Q1, as reflected by sturdy retail sales growth in January-February and despite higher unemployment, which rose for the first time in almost five years. On the other hand, industrial production slid in the first two months of the year, which took its toll on merchandise export growth. Turning to Q2, there are signs of green shots in Luxembourg’s all-important financial-services industry: Improved optimism in the services sector, against the backdrop of a strong rebound in sentiment across the Eurozone’s financial sector in March, bodes well for economic activity ahead.

Luxembourg Economic Growth

Growth is projected to accelerate this year, owing to an improved performance from the external sector. Domestically, analysts are optimistic that fixed investment will recover, despite the weak European backdrop and Brexit-linked uncertainties. Meanwhile, although household spending is set to decelerate, a tight labor market and lower inflation should cushion the slowdown. FocusEconomics analysts see growth at 2.7% in 2019, which is down 0.1 percentage points from last month’s forecast, and at 2.6% again in 2020.

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Luxembourg Facts

Exchange Rate1.130.65 %Jun 13
Stock Market6240.19 %Jun 13

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