Credit rating agency Standard and Poor (S&P) has joined DBRS and Fitch in confirming Luxembourg's AAA rating with a stable outlook.
Having confirmed this credit rating on Friday 13 March 2020, S&P attested to the economic and financial stability of Luxembourg, even in the current context of the COVID-19 (coronavirus) pandemic and its economic repercussions.
In its analysis, S&P stressed that Luxembourg has the means necessary to meet the economic challenge resulting from coronavirus, even in the event of a deterioration of the situation. The agency particularly noted the good health of public finances thanks to budget surpluses recorded during the last two years and the low level of public debt.
In the medium and long term, the economic impact for Luxembourg should remain limited and the fundamentals of sound economic growth will remain unchanged, according to S&P. The agency also expects to see improvement to Luxembourg's economic growth prospects in the second half of the year, which will go hand in hand with the mitigation of the epidemic and a rebound in economies from 2021.
As a result, GDP growth rates for the 2020-2023 period are expected to be around 2.3%, which is above growth at the European level. This growth is mainly driven by strong domestic consumption, the good health of the financial sector, the transparent and efficient institutional framework and the sustainable and responsible fiscal policy, focused on investments. The job market performance is also expected to improve in the second half and lead to a slow fall in the unemployment rate.
Luxembourg's Finance Minister Pierre Gramegna commented: “I am delighted that the Standard & Poor's agency has joined the other two agencies to reconfirm the “AAA” in Luxembourg with a stable outlook, and this in the current context marked by the Covid-19 pandemic. By confirming the highest possible rating, S&P attests that the prudent budgetary policies carried out by this government form a solid base so that our economy, our entrepreneurs and our employees can absorb the impact of the economic shock”.