Officials from the Washington-based organisation visited Luxembourg in March 2022 to produce its annual report, which has now been released.
Thanks to stable fundamentals, Luxembourg’s economic growth is expected to remain positive, albeit at a slower pace of around two per cent in 2022 and 2023, the IMF predicts.
As in other countries, Russia’s war against Ukraine and the resulting inflationary pressures have begun to weigh on economic confidence. Coupled with potential labour shortages and persistent supply chain bottlenecks, these factors could dampen the country’s short-term growth prospects, the IMF warns.
In this context, the groups welcomes the government’s introduction of the energy cap and the solidarity package, describing them as temporary measures to protect consumers’ purchasing power and support the most affected companies.
In line with the government’s long-standing policy priorities, the IMF also recommends the continuation of policies addressing structural challenges, such as housing and the ecological and digital transition.
Measures to increase the supply of social and affordable housing, as well as the government’s plans to tax unused land and vacant homes, are welcomed in the report. They should be integrated into a multidimensional approach.
With regard to the government’s very ambitious climate agenda, the IMF highlights Luxembourg’s leadership in sustainable finance. Given that the acceleration of digitalisation and automation during the pandemic could have adverse effects on some workers, the IMF also notes the government’s emphasis on reskilling and upskilling and on investing in digital education.
