Like the rest of Europe, Luxembourg must prepare for a difficult six months, writes Statec in its latest 'Flash Conjuncture'.

While the figures for Luxembourg's second trimester are not yet available, it is clear that the financial sector has struggled in this period due to the stock market degradation. On the brighter side, things are looking better for non-financial services, though inflation is of course affecting everyone.

Looking ahead to the third trimester however, the outlook for industrial production remains lacklustre. Because the stock markets have been pointing upwards since the end of July, there is little optimism in the financial sector.

What is currently striking in Luxembourg, is that in the second trimester 18 percent fewer fixed rate real estate loans were granted. Contracts with variable interest rates on the other hand, increased by 5.4 percent. In general, the demand for real estate loans is declining.

However, there is good news from the Horeca sector. The sector is looking back at a remarkable recovery in 2022 after the covid crisis. The sector is also almost back to its pre-crisis level in terms of its labour force.

And in terms of inflation, Statec predicts 6.6 percent for this year and 5.4 percent for next year. It remains possible that another index bracket would be invoked at the end of the year.

Statec continues to project 2 percent growth for 2022. For 2023, 4 percent is predicted.

You can read the whole flash conjuncture for August 2022 here.