Luxembourg GDP

Economy flatlines again in Q1 2026

Luxembourg’s economy stagnates for a second straight quarter: Luxembourg's GDP stagnated on a seasonally adjusted quarter-on-quarter basis in Q1, mirroring the reading seen in Q4. On a year-on-year basis, GDP expanded 1.7% in Q1, following a 2.0% expansion in the previous quarter.

Investment strength prevents GDP shrinkage: Relative to the prior period's data, figures in Q1 improved for investment (+7.8% in seasonally adjusted quarter-on-quarter terms vs -9.1% in Q4), exports of goods and services (-0.8% vs -1.4% in Q4) and imports of goods and services (-0.2% vs -1.9% in Q4). In contrast, readings worsened for private consumption (-0.7% vs +0.8% in Q4) and government consumption (+0.8% vs +1.1% in Q4). Investment emerged as the bright spot, staging a strong recovery driven by greater expenditure on non-residential construction projects and purchases of metal products and machinery. In contrast, household consumption fell sharply, weighed on by reduced spending on healthcare, restaurant services and car-related purchases.

GDP growth to strengthen through the end of 2026: Our panelists see GDP growth returning in Q2. While the Iran energy price shock will likely weigh on private consumption, Luxembourg's financial sector—which accounts for around a quarter of GDP—has proved relatively insulated from the U.S.-Iran war spillovers since domestic banks are little-exposed to Middle Eastern markets. Looking toward the end of the year, GDP growth should accelerate, with H2 outperforming H1 thanks to the government’s June fiscal stimulus package.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Luxembourg GDP projections for the next ten years from a panel of 15 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Luxembourg GDP.

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