European Commission forecasts Luxembourg’s GPD growth stalling to 2,6% in 2022
The European Commission presented its «Summer 2022 Economic Forecast». The data shows that Luxembourg’s GPD rose by 6,9 % in 2021. This impressive growth won’t be replicated in 2022. Despite rising by a respectable 1,2% in the first quarter, GPD’s yearly growth won’t exceed 2,6%. It will mostly be driven by private consumption and net exports.
Consumer sentiment remains negative and inflation keeps growing. Despite this the economy will stand the test, propped by the dynamic job market and savings accrued during the pandemic. Government-funded fiscal aid programmes will help as well, softening the blow from the growing energy prices.
The current world crisis and shrinking financial opportunities will negatively impact the investment growth. Investments in equipment and constructions are expected to start declining first. And the financial sector will have less of an impact on GDP than usual in 2022, the deterioration of the global stock market being the main cause.
The European Union will see stagnated growth this year as well. Experts say, that the EU’s total GDP will only grow by 2,7% by the end of 2022. And in 2023 the rise may be as small as 1,5%. Meanwhile the yearly inflation for the Union may rise by an entire 8,3%. The crisic in Ukraine and the food and energy resources shortages that followed.
Slow GDP growth and rising inflation will be a serious, though solvable problems for both Luxembourg and the European Union in the coming years. The country and the region will continue to grow. But at a pace lagging far behind that predicted by optimistic experts at the start of the year.
