Luxemburger Wort – Luxembourg’s real GDP forecast raised

Luxembourg’s real GDP forecast for 2017 has raised by 0.7 of a percentage point compared with the predictions made six months ago, according to the Central Bank of Luxembourg (CBL).

The CBL’s governing council released a statement outlining Luxembourg’s economic development for this year.

The June forecast for the 2017’s real GDP is now 4.6 per cent — up from the 3.9 per cent predicted
last December.

The acceleration of growth in 2017, according to the CBL, comes as a
result of an increase in exports due to growing international demand.

Another contributing factor is the development of the financial markets.

The sharp increase in the stock markets since the end of 2016 resulted
in an increase in investment funds in the first quarter of 2017.

Luxembourg’s financial sector is expected to gain more momentum this year and due to European growth becoming wider and stronger, other sectors of the Luxembourg economy could also be on the up.

Business surveys suggest investment spending in the manufacturing sector could grow strongly in
2017 at a rate which has not been seen since 2001.

According
to the statement, domestic demand could also increase due to a healthy
labour market and a series of tax reform measures implemented in January.

In 2018 and 2019 the expansion of the Luxembourg economy could decelerate slightly, reaching 3.9 per cent and 3.6 per cent respectively as global growth stabilises and due to a smaller impulse of the stock markets.

The CBL predicted an inflation rate of around 1.8 per cent in 2017, 1.7 per cent in 2018 and 2.0 per cent in 2019.

Compared with predictions made in December last year, these percentages are slightly higher for 2017 and lower for 2018.

According to the first national accounts data, real GDP growth stood at
4.2 per cent in 2016 — higher than in 2015 and above most
analysts’ expectations.

Last year was the fourth consecutive year for Luxembourg to register growth of 4.0 per cent or more.

(Heledd Pritchard, heledd.pritchard@wort.lu, +352 49 93 459)

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