Autumn 2023 Economic Forecast : Economic forecast for Luxembourg

The European Commission has today presented the Autumn 2023 Economic Forecast.

While the European economy has lost momentum this year against the background of a high cost of living, weak external demand and monetary tightening, economic activity is expected to gradually recover going forward.

In 2024, EU GDP growth is forecast to improve to 1.3%. This is still a downward revision of 0.1 pps. from the summer. In the euro area, GDP growth is projected to be slightly lower, at 1.2%.

Inflation remains on a downward trend. It is estimated to have declined to 2.9% in the euro area in October, from its 10.6% peak a year ago. This marks its lowest level since July 2021. Headline inflation in the euro area is projected to fall from 5.6% in 2023 to 3.2% in 2024 and 2.2% in 2025. In the EU, headline inflation is set to decrease from 6.5% in 2023 to 3.5% in 2024 and 2.4% in 2025.

The latest macroeconomic forecast for Luxembourg

Real GDP growth is projected to fall by 0.6% in 2023, before recovering to 1.4% in 2024 and 2.0% in 2025. The below-average growth in 2023 is mainly due to weak investment linked to tighter financing conditions and to lower net exports, while their rebound explains the improvement in 2024. After reaching a record high in 2022, headline inflation is set to decelerate over the forecast horizon, supported by measures to mitigate the impact of high energy prices. The projected government deficits are expected to drive up the government debt-to-GDP.

A press release, with further details, is available online

Further information on the economic forecast for Luxembourg is available here