Luxembourg Economic Forecast

Luxembourg Economic Outlook

March 26, 2019

The economy decelerated in the fourth quarter of last year. Household spending faltered in Q4, despite higher wages and record low unemployment through the second half of 2018. On a positive note, fixed investment rebounded sharply in the quarter, as did exports. Turning to the first quarter, despite upbeat industrial gains in Q4 2018, lackluster current-quarter performances in France and Germany bode poorly for manufacturing at the outset of the year. Moreover, the recent pullback across the Eurozone, compounded by Brexit-linked uncertainties, has left Luxembourg’s highly developed financial sector particularly exposed to further downturns in European economies this year.

Luxembourg Economic Growth

Growth is expected to maintain its momentum this year, despite easing domestic dynamics. Household spending is seen decelerating, although a tight labor market and low inflation should cushion any slowdown. In addition, fixed investment is expected to slip this year, amid a bleaker European backdrop. That said, slower imports should support the external sector in the near-term. FocusEconomics analysts see growth at 3.0% in 2019, unchanged from last month’s forecast, and also 3.0% in 2020.

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Luxembourg Facts

Exchange Rate1.130.65 %Apr 22
Stock Market7430.19 %Apr 18

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