The European Central Bank (ECB) has made an upward revision to its forecast for GDP growth in Luxembourg. What does this mean for residents? Most likely that there will soon be an improvement in the quality of life. GDP is very often used as an indicator, but it is not quite as simple as that.
Instead of 1.6%, Luxembourg's real GDP growth should be 1.8%. The economy is expected to return to its pre-pandemic growth path in 2024. GDP is projected to grow by 2.4%.
This means that the government will receive more taxes. More goods and services will be produced, wages will rise, consumer demand will increase and there will be a need to expand production and create new jobs. This is what usually happens. With a few tweaks.
The labour market, for example, is still on the verge of a slowdown. Employment growth is projected to decline from 3.5% in 2022 to 2.4% in 2023. It is expected that the unemployment rate will reach 5% in 2024. In a market that has gone through an economic crisis, this is a natural phenomenon. The construction sector is particularly vulnerable.
The unemployment rate, which is projected to fall to 4.6% in 2022, is expected to increase moderately to 4.8% in 2023 and to 5.0% in 2024.
Another global problem — inflation — will fall. It is finally starting to slow, after reaching 8.2% in 2022. Consumer price inflation is expected to fall to 3.2% in 2023 and to 2.6% in 2024.
The European Central Bank published its economic forecasts on Thursday 29 June. The ECB publishes projections of economic growth, inflation and unemployment rates for member states twice a year, in June and December.
At the beginning of June, Eurobarometer published a survey according to which 63% of respondents in Luxembourg are satisfied with the cost of living. A total of 507 interviews were carried out in Luxembourg. This is almost twice the European Union average. It's interesting to note that the figures have hardly changed since the last survey in autumn. Last year, 62% of respondents were satisfied, compared with 33% for the EU as a whole.