Inflation will normalize: Statec forecast till 2027

The latest forecast of the National Statistics Agency is much more optimistic than the February forecast of last year. Two factors contributed to this: a good performance of the financial sector and a rather mild winter.

Statec forecasts a slowdown in economic activity in 2023, with Luxembourg's GDP growth of 2.2%. The next year, 2024, there will be a sharp GDP increase of 3.2% followed by a smooth stabilization at 2.9% from 2025 to 2027.

Unemployment will rise by several percentage points from 5% in 2023 to 5.6% in 2027. That will be caused by the reduction of economic activity and the withdrawal of state support. Now the same process applies to the construction sector, which was significantly damaged last year.

Inflation, on the other hand, will normalize. However, the process will not be quick, and the earliest noticeable changes will happen only by 2025. The inflation rate will be completely stabilized only by 2027 and will amount to 1.6% in annual terms.