Credit: STATEC; European Commission
According to STATEC, the Luxembourg economy has shown signs of recovery in the third quarter of 2020.
As in the eurozone, Luxembourg's GDP should have fallen significantly in the second quarter of 2020 under the major effect of coronavirus containment measures. Nevertheless, from May onwards, signs of recovery have emerged in most branches of activity and the business tendency surveys available until July-August confirmed this more favourable trend.
Whilst the evolution of Luxembourg's GDP in the second quarter of 2020 remains unknown (to be published on 18 September), a very sharp drop is expected, notably in the image of the estimates already available for the eurozone (-12% over a quarter), in connection with the turbulence caused by the pandemic.
Confinement measures cut off most economic activity from the end of March, although the gradual lifting of restrictions has led to an economic rebound. Other factors continue to impact the economy, such as social distancing, people voluntarily limiting their movement and teleworking.
Nevertheless, despite a sharp decline in the second quarter of the year, Luxembourg is already showing signs of economic growth. Industrial production reached a low point in April but grew by 5.7% within one month, compared to 12% growth in the eurozone. Similar trends were recorded in the construction and retail sectors, as well as for car registrations, Horeca turnover and certain business services (e.g. technical controls and analyses).
In annual comparison, however, there has been an overall decrease, for instance the volume of retail sales in Luxembourg fell 12% in May 2020 compared to the year before; this figure was down 30% in April 2020.
STATEC predicted that national GDP would decrease by 6% before increasing by 7% in 2021. The next indexation is unlikely to be triggered before 2022.
