„Le programme de soutien budgétaire a atténué l’impact du choc énergétique; la régulation des prix de l’énergie a permis de maîtriser l’inflation“ – le FMI confirme la résilience du Grand-Duché

The IMF has released its final report on Luxembourg, following its mission in March 2023 for the annual Article IV consultations.
The report shows that Luxembourg has rebounded well despite the COVID-19 pandemic and the Ukrainian war, demonstrating resilience in the face of global financial tightening. The IMF expects the country’s growth to slow to less than 2% in 2023 due to ongoing uncertainties and global inflationary pressures. Risks of deterioration, such as a deeper global slowdown and systemic financial instability, remain significant.
The IMF praises the measures taken by Luxembourg, including the Solidaritéitspäck, to control inflation, support affected businesses, and maintain consumers‘ purchasing power. Although costly, these measures have helped keep inflation lower than in most euro area countries and limited wage indexations. The Minister of Finance emphasizes the importance of these measures in providing predictability in an uncertain external environment and reaffirms the government’s commitment to prudent and forward-looking economic policies.
While the overall assessment of Luxembourg’s financial sector is positive, the IMF highlights pockets of vulnerability, particularly in real estate and non-bank financial institutions. Tightening monetary policy could adversely impact private consumption and investment by reducing credit demand, especially in the real estate sector. The IMF recommends continued efforts to address structural challenges in housing supply and accessibility.