Luxembourg Economic Forecast

Luxembourg Economic Outlook

May 5, 2020

Available data paints a bleak picture for the first quarter and beyond amid the Covid-19 pandemic and the measures imposed to combat its spread. Consumer sentiment plunged to a near four-year low in March, while jobless claims surged in the same month, sending the unemployment rate to an over three-year high. Meanwhile, in mid-April the government issued a EUR 2.5 billion bond at negative interest rate to support state finances, while implementing its fiscal stimulus package worth roughly 14% of GDP. On 14 April, the authorities also announced a gradual exit strategy: Lockdowns first will be lifted in the construction sector and related activities, with the consumer-facing sectors to be lifted at a later stage.

Luxembourg Economic Growth

GDP is seen contracting this year due to the Covid-19 pandemic. Lockdown measures will strain consumer spending and fixed investment, while feeble global demand is set to depress the external sector. Fiscal stimulus should provide some support, however. FocusEconomics analysts see GDP contracting 5.7% in 2020, which is down 1.9 percentage points from last month’s forecast. For 2021, the panel sees GDP growth at 5.6%.

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Luxembourg Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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