“Economic growth will be modest in 2024, but should intensify in 2025 and 2026”: in a press release sent on Monday, Statec wanted to be optimistic. After a contraction in real GDP in 2023, the Luxembourg economy returned to growth – admittedly fragile – in 2024 (+0.5% expected) but should thus display “more robust” growth in 2025 and 2026 (+2 .5% and +2.4%).
On the price side, the decline in inflation was “faster than expected”, in particular because of a sharp drop in the prices of petroleum products. In Luxembourg, inflation stood at 0.8% in November, well below that observed in the euro zone (+2.3%). However, it should strengthen in 2025 (+2.1%) before declining in 2026 (+1.8%): Statec confirms the triggering of salary indexation in the 2nd quarter of 2025 and projects another in the 2nd quarter 2026. Remember that salaries were indexed three times in 2023 and once a year from 2020 to 2022.
The last indexation dates back to September 2023. The average salary cost has thus slowed down considerably in 2024: +2.2% compared to +7.3% in 2023. Statec forecasts an increase of 3% in 2025 and 2.4% in 2026.
Employment continues to slow down, and is at its lowest since 2009 (+1% in 2024). Statec projects increases of 1.4% in 2025 and 2.2% in 2026, far from the almost 3% on average over the last 20 years. The unemployment rate is expected to increase slightly in 2025 to 5.9% before falling to 5.7% in 2026.
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