Luxembourg's economy is slowing down

States have not been left unaffected by the recession in the eurozone. The negative effects will also reach Luxembourg, despite the country's great advantage.

Statec has already revised its GDP growth forecasts to 1.5% this year and 2.5% next year. Together with Poland, Luxembourg had one of the highest figures a short time ago.

Read more about recession in Euro zone in our article: Euro area is in a recession

Consumer price pressures remain high due to global inflation. The financing capacity of households and companies is being affected by the determination of monetary authorities to reduce inflationary pressures by raising interest rates.

Earlier, Eurostat revised its forecast for GDP growth in the euro area from 0.1% to -0.1%, indicating a technical recession. However, Luxembourg stands out with a strong GDP growth rate of 2%. Employment in Europe grew by 0.6%, led by Estonia with a remarkable 4.4% increase. Lithuania, Romania and Greece recorded a decline in employment. Luxembourg's employment rate remained stable at 0.6%.

The effects of the economic downturn will be felt in all sectors of the economy, but the construction industry will be hit particularly hard. The labour market situation is also unstable. As a result of the economic stagnation, there will be a lack of job creation and a possible increase in the unemployment rate. However, this growth will be invisible and manageable, according to experts.

Luxembourg has had an unfavourable start to the year, with a confirmed slowdown in employment, particularly in business services and construction. Unemployment rates are rising and leading indicators for employment are falling or weak. Job vacancy rates remain at historically high levels, pointing to labour shortages, although they have fallen slightly since the end of 2021.