Luxembourg Economic Forecast

Luxembourg Economic Outlook

September 29, 2020

The economy contracted for the first time in nearly eight years in the second quarter as GDP fell at a record-breaking pace due to the fallout from the pandemic and associated containment measures. The downturn came largely on the back of plunging household and capital expenditure as consumers and firms put off non-essential spending. Turning to Q3, available data hints at firming activity. In July, the economic sentiment indicator logged its best reading since March following the further lifting of Covid-19 restrictions during the month, and it remained broadly unchanged in August. Moreover, in August the jobless rate dropped to its lowest level in five months, indicating a stabilizing labor market. Meanwhile, in early September, both Fitch Ratings and S&P Global Ratings affirmed the country’s triple-A rating, noting its sound public finances and strong capacity to deal with the pandemic.

Luxembourg Economic Growth

The economy is set to contract notably this year as the Covid-19 pandemic and its related lockdown measures constrain domestic activity and exports. Ample fiscal and monetary stimulus should cushion the downturn somewhat, however. Next year, GDP is expected to rebound as the global economy recovers from the pandemic. FocusEconomics analysts see GDP contracting 6.1% in 2020. For 2021, the panel sees GDP growth at 6.2%, which is up 0.1 percentage points from last month’s estimate.

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Luxembourg Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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