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Luxembourg firms risk Omicron, inflation set-backs

Luxembourg firms risk Omicron, inflation set-backs

by Andréa OLDEREIDE 2 min. 16.12.2021
The Chamber of Commerce warned of risks despite expected strong growth
Carlo Thelen, general manager of the Chamber of Commerce
Carlo Thelen, general manager of the Chamber of Commerce
Photo credit: Gerry Huberty

Rising inflation combined with the new Covid-19 Omicron variant could cause new set-backs for Luxembourg companies, the country's main business lobby said on Thursday, despite strong growth expected this year and the next.

The Grand Duchy is expected to weather the pandemic better than many of its neighbours, with the country's statistics bureau Statec forecasting the economy to grow by 7% this year and by 3.5% in 2022.

"Economic growth for 2022 will, however, depend on the country's health situation and vaccination rate … and on its ability to limit inflation for the coming year, in addition to the availability of skilled labour," the Chamber of Commerce said in a press release.

Surging fuel prices already caused inflation to reach 4.5% in Luxembourg in November – up from 3.6% compared with the same month last year. Food items went up 0.4% compared with October and the biggest hike was in flour, up 3.5%, followed by fish at 2.2% and bread with a 2% increase.

Global supply chain problems and higher petrol prices are the main threat for companies,  Christel Chatelain, the head of economic affairs at the Chamber of Commerce said at a news conference on Thursday.

The Grand Duchy has already been hit by worldwide supply shortages in parts of its economy such as the space and construction sectors which have affected businesses abilities to procure materials. 

Countries across the globe shut their factories and electrical plants to stem the spread of the deadly coronavirus for months in 2020, and again in 2021. In the electronics sectors for example, this meant that the production of goods, such as electronic chips, ground to a halt even as demand went up as more people streamed TV to their laptops at home or bought new computers to telework.

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