Economy & Politics

The country’s economy is recovering

The positive signals seen during the month of August seem to be confirmed for this re-entry. Although not all indicators are green, the Idea Foundation believes the economic outlook is improving.

Eddy RENAULD

Eddy RENAULD

The positive signals seen during the month of August seem to be confirmed for this re-entry. Although not all indicators are green, the Idea Foundation believes the economic outlook is improving.

“In the heart of the summer, the economy continued to improve, without however returning to its pre-crisis level.” This is the main lesson of the economic and social dashboard published by the Idea foundation for the month of September 2020.

Encouraging news for the Luxembourg economy. Thus on the job market, the country has returned to a certain dynamism, again creating jobs (+8,453 since May) in favor of more residents than cross-border workers. Compared to the pre-crisis level, “only” 602 positions have been lost.


Einkaufsstraße / CP Presentation of the pro Pakt to develop the Luxembourg retail trade / 04.16.2016 / Luxembourg / Foto: Julien Ramos

Since last May, positive signs have emerged from many sectors of activity in Luxembourg. This favorable trend is confirmed by the economic surveys carried out by Statec in July-August.


On the other hand, if the average growth rate had remained at its 2019 level, there would have been more than 8,000 additional jobs in July.

Another positive indicator is the use of partial unemployment. Although the terms of access were restricted, it declined steadily throughout the summer with 2,966 requests for September, down from 6,184 in June. The unemployment rate, meanwhile, continued to decline to 6.6% (+ 1.1% compared to the pre-containment) with a caveat concerning long-term unemployment.

Encouraging figures certainly, but there is a flip side. This recovery phase has been put in place thanks to a significant budgetary effort on the part of the State.

The cumulative central government deficit since the start of the year reached almost € 4 billion in July 2020 (compared to a very slight surplus over the same period twelve months earlier).


Ministry of Finance - Foto: Pierre Matgé / Luxemburger Wort

Over the first three months of the year, revenues collected by the State are down (-8.4%) while spending jumped 28.5%, according to data released Monday by the Ministry of Finances. In question, the aid measures put in place by the government to respond to the health crisis.


In this context, it is not surprising that consumer confidence remains weak. The persistence of the virus and its economic consequences are of concern to Luxembourg households. They wanted to save in July when the intention to make major purchases over the next 12 months was declining.

“The government’s forthcoming announcements on new support measures could therefore prove to be life-saving in this context of doubt,” concludes the report from the Idea foundation.


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