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Luxembourg economy slipped in second quarter, says Statec

Luxembourg economy slipped in second quarter, says Statec

by Yannick LAMBERT 14.09.2022
Drop in national GDP comes as Europe faces high inflation and a darkening economic outlook due to energy prices and the war in Ukraine
Photo credit: Photo: Chris Karaba

Luxembourg's gross domestic product dropped 0.5% in the second quarter of the year, the national statistics agency said on Wednesday, with the risk of poverty increasing during the pandemic, as Europe faces a difficult economic outlook sparked by Russia's invasion of Ukraine.

"Seasonally adjusted real GDP decreased by 0.5% compared to the previous quarter", Statec said in a statement. However, GDP has risen 1.6% since the second quarter of 2021, when pandemic restrictions were still weighing heavily on the country's economy, Statec said.

In the first three months of the year, the Grand Duchy's economy grew by o.7% compared to the last quarter of 2021, according to Statec. The country has so far avoided a 'technical recession', which is defined by two consecutive quarters of negative growth.

Luxembourg’s annual inflation rate remained largely unchanged at 6.8% in August, Statec said last week, below that of most other European countries except Malta.  

Luxembourg's central bank governor has warned that more Eurozone rate hikes are likely this year, following the European Central Bank's record increase of o.75 percentage points last week, as the bloc faces strong inflation and a darkening economic outlook.  

Household disposable income did increase in 2020 despite the health crisis and has been less affected than initially estimated, Statec said on Wednesday. The average monthly disposable income per household went up to €6,247 in 2020, an increase of 9.3% compared to 2019.  

However, despite the average rise, "low-income households are all the more likely to slide into poverty", Statec said, as more households struggled to make ends' meet. 

The poverty-risk rate - whereby people are vulnerable to falling below the poverty line - stands at 18.3% in 2020, above the 2019 rate of 17.4%, the latest figures from Statec showed.  

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