Luxembourg Economy to Shrink by up to 12% due to COVID-19

STATEC, the national statistics office, has presented its projections for the impact of COVID-19 on the Luxembourg economy; two possible scenarios foresee the shrinking of the economy by between 6% and 12% this year.

Against a backdrop of economic uncertainty, STATEC has developed two scenarios, each based on a different course taken by the health crisis. In both cases, the wounds inflicted on the country's economic and social fabric this year would be deep.

In fact, STATEC expects the Luxembourg economy to shrink by up to 12% in 2020. The first scenario, referred to as "limited confinement", would apply in the case of a strong rebound in economic activity in the third quarter of the year and the lifting of most restrictions by the second half of the year (and almost all by the end of 2020). In this case, the economy is expected to shrink by 6% this year before rebounding by 7% in 2021. 

The second scenario, entitled “prolonged confinement”, takes into account the possibility of a second wave of the virus which would require the reintroduction of certain restrictions later in the year. In this case, Luxembourg’s GDP could shrink by around 12% in 2020 before rebounding by 1.8% in 2021.