Luxembourg Economic Forecast

Luxembourg Economic Outlook

September 28, 2021

Economic activity likely remained healthy in the second quarter. The unemployment rate trended downwards through June, while consumer sentiment returned to optimistic territory at the tail end of the quarter, boding well for household consumption. Moreover, private sector activity likely strengthened in Q2, with business confidence rising in each month. Turning to the third quarter, available data paints a mixed picture. Although consumer sentiment fell back into pessimistic territory in July–August, the unemployment rate continued to drop in the same period, coming in at the lowest level since February last year in August. Meanwhile, business confidence rose to its highest level since December 1997 in the same month, highlighting that firms retain an optimistic outlook.

Luxembourg Economic Growth

After returning to growth this year on the back of firming demand, the economy is forecast to grow at a softer pace next year due to a less favorable base effect. Expansionary fiscal and monetary policies, together with inflows of EU funds, should support activity. However, lingering uncertainty over Covid-19 and potential new lockdown measures cloud the outlook. FocusEconomics analysts see GDP expanding 4.5% in 2021 and 3.3% in 2022, which is unchanged from last month’s forecast.

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Luxembourg Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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