Current activity in the Grand Duchy's construction sector continues to decline, while the labour market's recovery seems to be slower than predicted.

Although Luxembourg is recovering from a recession, medium-term economic growth and developments in the labour market are looking less promising than a few months ago, says Statec.

The national statistics office has updated its data for the Ministry of Finance, which will present upcoming budget proposals to parliament on 9 October. For 2024, Statec predicts a 1.5 percent GDP increase, with the 3 percent mark not being met until 2028.

The construction sector remains in decline, while the labour market seems to be recovering more slowly than initially hoped. Unemployment is even projected to rise until at least 2026, reaching a rate of over 6 percent.

Inflation is forecast at 2.3 percent this year, increasing to 2.6 percent by 2025 due to the planned removal of energy price caps.