Cityscape in Luxembourg

Luxembourg GDP Q1 2024

Luxembourg: Economy records quickest expansion since Q4 2021 in the first quarter

GDP expanded 0.5% on a seasonally adjusted quarter-on-quarter basis in the first quarter, above the flat reading recorded in the fourth quarter of last year. Q1’s reading marked the best result since Q4 2021. On an annual basis, GDP contracted 0.4% in Q1, from the previous quarter’s 0.8% decrease. Q1’s reading marked the best result since Q3 2022.

Private consumption fell 1.5% in the first quarter, which contrasted the fourth quarter’s 1.1% expansion. Government consumption growth was the slowest since Q3 2023, expanding 0.1% (Q4 2023: +1.3% s.a. qoq). Meanwhile, fixed investment slid at a steeper pace of 2.8% in Q1, below the 0.1% decrease logged in the previous quarter. Exports of goods and services dropped at a milder pace of 0.7% in Q1 (Q4 2023: -1.0% s.a. qoq). Conversely, imports of goods and services slid at a steeper rate of 1.4% in Q1 (Q4 2023: -0.2% s.a. qoq).

Our panelists expect GDP growth to gradually gain steam this year as inflation abates and interest rates are cranked down by the ECB. Over 2024 as a whole, our panelists expect the economy to grow 1.5%, a rate below the average of the preceding 10 years.

Analysts at the EIU commented on the outlook:

“Growth in 2024 will be driven by slowing inflation (which will strengthen household spending), loosening monetary policy from the second half and a rebound in export growth. Financial services exports are the traditional driver of growth in Luxembourg, and this sector will remain dominant in 2024. Real GDP growth will accelerate to 2.4% in 2025. […] The main risk to the economic outlook for 2024 and beyond is that, should inflation ease too slowly, the ECB may have to tighten monetary policy further than we currently expect.”

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