During a visit to the OECD headquarters in Paris last week, Minister of Finance Pierre Gramegna told RTL that “in the coming weeks Luxembourg will see the return of its pre-crisis GDP”.
STATEC believes that economic activity is indeed starting up again but remains very cautious in its analysis. The economy is still facing great uncertainties, according to STATEC director Serge Allegrezza. It is therefore still too early to speak of a return to normality.
As it is not clear how much growth the economy will achieve, STATEC is again working with three scenarios for its predictions in its latest economic report: a pessimistic one, an optimistic one and one halfway between the two. According to this likely scenario, STATEC expects Luxembourg’s economy to grow by 6% in 2021.
Inflation is on the rise and, according to STATEC’s figures, has returned to a normal rate of 2% in recent months. This increase is mainly due to the sharp rise in oil prices.
A few days ago, STATEC already indicated that inflation would be more sustained than expected and that “the next index bracket would fall towards the end of 2021".
According to STATEC, house prices could increase less substantially over the next two years. According to the director of the Institute, the extremely strong increase of the last two years could potentially be considered “a bubble”.
Despite the crisis, Luxembourg’s labour market has remained dynamic. STATEC explains this phenomenon mainly by the measures taken by the government to keep people in employment, and above all by short-time work. The unemployment rate has stabilised at just over 6%, according to STATEC figures.
Allegrezza also addressed those who question the existence or seriousness of Covid-19. There were far more deaths last year than in the previous ten years in the Grand Duchy. “There is an excess of deaths,” the Statec director stated.
