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Luxembourg economic growth is heading towards 5% for this year and 2018. Luxembourg GDP growth went above the 4% mark in 2016.  The momentum for previous years has been revised upward. Economic expansion continued at the end of the year, with a better balance between external and domestic demand. The financial sector should benefit from a more favourable climate underpinned, in particular, by the recovery in stock markets and the continuation of an encouraging trend of loans granted to households and businesses. With regard to other sectors, trends in output indicators (industry and construction) and turnover (non-financial services) were a little disappointing in the first months of 2017. However, corporate and household confidence is at historically high levels and, coupled with the strengthening of European economic momentum, should stimulate activity. In various quarters, there is a groundswell of support for strengthening private consumption and investment, two factors that have only had a modest impact on growth in recent years.

For the current year as a whole, STATEC forecasts a rise of close to 5% in GDP in volume, a pace that should be easily maintained in 2018. The economy is thus heading towards a peak with a distinctly positive output gap and a rapidly expanding labour market. This is being played out against the backdrop of a lack of significant tensions with regard to prices and wages.

Continued growth in the euro zone

After having slowed down in 2015 and 2016, global growth should strengthen this year and next, bolstering developed and emerging markets. At present, the euro zone is experiencing a relatively moderate and yet consistent cycle of expansion. Very positive data published in economic surveys over recent months point towards the possibility of a further strengthening of activity across the euro zone this year. Based on these developments and the forecasts of the main international organisations, STATEC expects growth in the euro zone to be close to 2% in 2017 and 2018. Domestic demand, which up until now has been mainly driven by household consumption, is expected to reap the rewards of an increase in private investment in 2017. This trend should accelerate further in 2018, meaning that the recovery in the euro zone is likely to become more and more self-sustaining.

Read the full Statec press release 

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