IDEAS home Printed from https://ideas.repec.org/p/imf/imfscr/2024-155.html
   My bibliography  Save this paper

Luxembourg: 2024 Article IV Consultation-Press Release; and Staff Report; and Statement by the Executive Director for Luxembourg

Author

Listed:
  • International Monetary Fund

Abstract

The 2024 Article IV Consultation discusses that Luxembourg’ economy contracted in 2023 despite buoyant consumption, mainly due to weak external demand and residential investment. Inflation is subsiding but underlying measures remain high. Credit growth turned negative as demand dropped and real estate prices declined. The newly elected government has approved a mix of temporary and permanent measures to support purchasing power and housing demand. Gradually easing financial conditions, continuing disinflation and expansionary fiscal policy is expected to help the economy rebound and the financial cycle bottom out. Inflation should decline in 2024, before temporarily increasing in 2025 once administrative price measures expire. The recovery is fragile amid heightened geopolitical tensions. Risks are tilted to the downside, stemming mainly from external demand/supply shocks and a disorderly correction of asset prices, including domestic real estate valuations. Sustained economic growth hinges on raising productivity, which has been stagnant since the Global Financial Crisis. Increasing investment in intangible assets, aligning workers’ skills with the current demands of the economy, reducing administrative burden, and making the wage indexation system more flexible will be key to harnessing productivity gains and bolstering competitiveness.

Suggested Citation

  • International Monetary Fund, 2024. "Luxembourg: 2024 Article IV Consultation-Press Release; and Staff Report; and Statement by the Executive Director for Luxembourg," IMF Staff Country Reports 2024/155, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2024/155
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=549930
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfscr:2024/155. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.