Luxembourg’s economic growth is expected to be more marked in 2025 compared to the past year. This is what emerges from the forecasts of Statec, the statistical institute of the Grand Duchy, in its latest economic report published this Monday, January 6.
While 2025 has just opened, Statec provides its forecasts for the year, as well as an assessment of the developments observed in 2024. Growth, inflation or even indexes: this is what awaits Luxembourg.
Stronger economic growth than in 2024
According to Statec data, economic growth in the Grand Duchy reached 0.5% in 2024. “The Luxembourg economy returned to growth in 2024 after a contraction in real GDP in 2023. However, this recovery lacks strength and remains unevenly distributed between the different sectors,” writes the statistical institute in its economic note.
Statec expects growth of 2.5% for 2025. This should even reach 2.6% for 2026. According to the institute, this is explained by “lower interest rates favoring residential investment and the export of financial services against a backdrop of stronger external demand.
Unemployment rising slightly, but expected to fall again
The unemployment rate reached 5.7% in Luxembourg at the end of 2024. Statec expects a slight increase in this area, to 5.9%. “Employment growth in Luxembourg continues to slow down, reaching its lowest level since 2009 in 2024,” explains the institute.
Nevertheless, Statec forecasts a recovery in employment for the next two years. “The expected rebound in activity would also contribute to strengthening employment growth: Statec anticipates +1.4% for 2025 and +2.2% for 2026, i.e. rates still significantly lower than the average of the last twenty years (close to 3%). The unemployment rate is expected to increase slightly to reach 5.9% in 2025 before falling to 5.7% in 2026, reflecting stronger employment growth.”
-Rising inflation, before a slight decline
Statec recalls that inflation in Luxembourg is well below the level in the euro zone: 0.8% in the Grand Duchy, compared to 2.3 to 2.4% in the euro zone.
On the other hand, it should start to rise again in 2025, “following in particular the reduction of energy price capping measures”, to reach 2.1% this year. For 2026, it would be around 1.8%, according to the statistical institute.
The next indexation expected in the second quarter
Highly awaited by employees, the new indexation of salaries ultimately did not take place in 2024. It was postponed to the beginning of 2025, to a date that is still unclear.
Statec foresees “indexations planned for the second quarters of 2025 and 2026”. As a reminder, the last index tranche fell in September 2023.
The summary of Statec forecasts for 2025 and 2026. © PHOTO: Statec
