The International Monetary Fund projects a slowdown in economic growth for Luxembourg in the near future in its recently released ‘World Economic Outlook’ report.
This projected slowdown is in line with the general development of the eurozone. The IMF warned that the eurozone’s economic outlook was clouded by Brexit and election uncertainties, with growth expected to be only modest overall.
While real GDP growth for the Grand Duchy was at 4% in 2016, the projections for 2017 and 2018 given by the IMF were at 3.7% and 3.5% respectively.
Luxembourg’s growth remains strong compared with the average of the eurozone (1.7% for 2017, 1.6% for 2018) but also seems to suffer a stronger slowdown overall.
At the same time, consumer prices will keep rising in Luxembourg, going from 0.1% in 2016 to 1.4% in 2017 and 1.3% in 2018, which could negatively influence purchasing power of households.
The IMF projects a positive development for the Grand Duchy’s employment situation. With unemployment standing at 6.4% in 2016, the numbers are expected to go down to 5.9% in 2017 and 5.7% in 2018.
Compared with the eurozone, Luxembourg is doing rather good in this field. Unemployment in the eurozone stood at 10.0% in 2016 and will decrease slightly to 9.6% and 9.1% in 2017 and 2018.
In the same projection period, Luxembourg’s current account balance will stay relatively stable, going from 4.8% in 2016 to 5.1% in both 2017 and 2018.
The current account balance is higher than for the average of the eurozone which will slightly decrease from 3.4% in 2016 to stabilise at 3.0% over the coming two years.