Luxembourg has retained its coveted AAA credit rating with a stable outlook, Moody’s confirmed on Friday, highlighting continued confidence in the country’s political, economic, and financial management despite a challenging international environment. The Ministry of Finance said the decision reflects the resilience of Luxembourg’s economy and the solidity of its public finances, arguing the government’s ‘Matenee wuessen’ budgetary policy is “bearing fruit”.
After several years of subdued growth, partly linked to a slowdown in construction and real estate triggered by higher interest rates, the ratings agency expects real GDP growth to accelerate. It forecasts growth to reach 2.1% in 2027.
Moody’s also anticipates a gradual increase in public debt, from around 27% of GDP in 2025 to 28.2% in 2027. The general government deficit is expected to remain moderate, despite higher spending tied to the government’s commitment to raise defence expenditure to 2% of gross national income starting in 2025.
The stable outlook reflects Moody’s view that Luxembourg’s credit profile will remain resilient in the face of broader European growth challenges, supported by high levels of immigration and the country’s specialisation in high value-added services.
