Gramegna "confident" economy will grow by 4% in 2021
By Madalena Queiros and Kate Oglesby
Finance Minister Pierre Gramegna is confident that Luxembourg’s economy will meet International Monetary Fund (IMF) predictions and grow by 4% in 2021.
The IMF in May praised Luxembourg for how it handled the economic fallout from the Covid-19 crisis, and said it expects the Grand Duchy’s economy to grow by 4% this year, something Gramegna thinks is achievable.
The country's Gross Domestic Product (GDP), which measures the total value of goods and services in an economy, already increased by 4.9% in the first quarter of 2021, compared to the first three months of 2020, Luxembourg’s statistics bureau Statec said last week.
“What we can agree on is that all indicators are positive, with a strong probability of being able to expect, at least, a 4% growth [in 2021], [as] foreseen by the IMF,” Gramegna said in an interview with Contacto. “I am confident,” he added.
The IMF praised Luxembourg for its handling of the economic fallout from the health crisis, crediting the government for spending 18.6% of its GDP to prop up the economy, calling it "rapid, targeted and appropriate".
The Washington-based body said that the country’s quick shift to teleworking could also account for the 1.3% contraction of Luxembourg’s economy last year - significantly less than the 4.5% decline estimated previously by Statec.
“No country had a manual for responding to this crisis,” said Gramegna. “[And] companies in Luxembourg were very prepared to make teleworking work. They had the infrastructure in place…”
Despite Gramegna’s optimism the finance minister expects the country to run on a €2 billion deficit in 2021.
“It is necessary to be realistic, despite all the praise [from the IMF], we still do not currently have the balance of public finances, which we had before,” he said, comparing the figures to the public finances of 2019 where there was a budget surplus of just over €500,000.