Luxembourg Economic Forecast

Luxembourg Economic Outlook

July 23, 2019

Growth decelerated in the first quarter on a broad-based slowdown amid a wider European pullback. Domestically, private consumption lost stride, as households bolstered their savings amid stock-market volatility and greater deposits by British nationals in preparation for Brexit. In addition, fixed investment contracted partly due to subdued construction activity. Meanwhile, although the gloomier external backdrop dragged on exports in Q1, a corresponding fall in import growth cushioned the slowdown. Turning to the second quarter, private consumption likely picked up: Consumer sentiment turned positive in the quarter, while retail sales growth for April nearly doubled Q1’s average. Business confidence, on the other hand, sank deeper into negative territory in Q2 on souring expectations within the industrial sector, likely weighing on capital investment.

Luxembourg Economic Growth

Economic activity is projected to soften this year as mounting regional uncertainty weighs on the all-important financial sector, as well as on exports. Nevertheless, solid private consumption should buffer any slowdown as households benefit from a tight labor market, as well as from inflation-indexed increases in wages and pensions. FocusEconomics analysts see growth at 2.4% in 2019, which is down 0.1 percentage points from last month’s forecast, and at 2.6% in 2020.

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Luxembourg Facts

Exchange Rate1.110.65 %Jul 31
Stock Market6290.19 %Jul 31

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