As Europe braces for sluggish growth, Luxembourg now faces its own challenges with stagnating GDP and questions about its future growth potential, the nation's chief statistician told RTL Radio on Tuesday.
In a Tuesday interview with our colleagues from RTL Radio, Tom Haas, the director of the National Institute of Statistics and Economic Studies (STATEC), acknowledged that price increases – particularly for services and travel – have accelerated in recent months and are expected to continue through year-end. However, he noted Luxembourg's current inflation rate remains moderate compared to recent peaks. "While price hikes exceeded 5% two years ago, they now stand at around 2%," Haas said.
The STATEC chief projected the next wage indexation would likely be triggered in Q3 2025 based on current forecasts.
Multiple crises weigh on economic recovery
Haas painted a subdued picture of Luxembourg's economy, citing stagnation since the 2022 recession. He attributed the sluggish recovery to successive global shocks: pandemic disruptions, supply chain crises, and inflation driven by the Ukraine war. "The Grand Duchy is struggling to regain momentum," Haas stated, adding that renewed uncertainty from the US-led trade war further clouds prospects. "Uncertainty always harms economies," he emphasised.
Is lower growth the new normal for Luxembourg?
STATEC projections indicate modest GDP growth of 1% in 2025 and 2% in 2026 for Luxembourg, mirroring the EU's forecast of 1% growth this year and 0.5% next year. While these figures represent potential growth for the bloc, they mark a significant departure from Luxembourg's historical 3% average. "We must now consider whether 2%, not 3%, will become our new baseline growth rate," Haas cautioned, highlighting a potential structural shift in the economy.
When asked whether increased military expenditure might stimulate growth, Haas expressed skepticism. Given Luxembourg's minimal arms production and small defence sector, he projected only marginal GDP impact from such spending.
Minimal direct impact from US tariffs
The new US tariffs – 15% on most exports and 50% on steel/aluminium – will have relatively muted direct effects, as only 3% of Luxembourg's goods exports go to the US. Luxembourg mainly exports services, Haas noted. However, he warned of potential ripple effects: "The Grand Duchy will be indirectly impacted if our trading partners such as Germany, France, Belgium, or the Netherlands are severely affected. The same will happen in the event of financial market fluctuations."
"Without reliable statistics, recessions can strike fast"
Haas voiced alarm over recent US developments where President Trump dismissed his chief statistician over unfavourable labour market data. "High-quality, independent statistics form democracy's bedrock," Haas emphasised, noting that objective data is crucial for sound decision-making across government, business, and society. "If confidence in the numbers disappears, recessions can strike fast," the STATEC director warned.
The Luxembourg statistics chief contrasted this with Europe's robust safeguards, where Eurostat enforces rigorous quality controls to ensure national institutes maintain independent, transparent methodologies.
"The fact is that in Luxembourg, we already benefit from guaranteed independence, top-tier statistical quality, and strong public trust in our data – foundations we will continue strengthening," Haas affirmed.
