Luxembourg’s economic stability means the Grand Duchy can keep low and steady inflation. It also shows steady real GDP growth. The banking and funds sector is strong, well-capitalized, and liquid. Public finances stay close to balance, even with economic ups and downs. In practice this is reflected in:

Resilient growth: Output fell during the slowdown from 2022 to 2024. It is expected to grow by about 1¼ % in 2024. In 2025 and 2026, growth is projected to be between 2¼ % and 2½ %. This growth will be supported by recovering finance, strong household spending, and increasing investment.

Tamed price pressures: Headline inflation, which spiked with energy costs in 2022, fell below 1 % at the end of 2024 and is expected to stay near the European Central Bank’s medium‑term objective (around 2 %) over the next two years.

Prudent public accounts: Thanks to long‑standing fiscal rules and AAA credit ratings, the general‑government balance typically oscillates between a small surplus and a deficit of roughly 1 % of GDP, even when growth softens.

The country has a strong external position.

It has a large surplus in services.

This surplus comes from its role in global fund administration and corporate banking.

It helps balance the deficit in goods. This supports one of the highest GDP-per-capita levels in the world.

Strong institutions: EU and euro‑area membership, political consensus on open‑market policies, and automatic wage indexation that protects household purchasing power reinforce confidence during shocks.

Taken together, these features mean that even when external demand weakens or financial markets turn volatile, Luxembourg can absorb the impact without sharp swings in output, prices or employment—hallmarks of a stable economy.

Luxembourg’s economic stability service provides comprehensive analysis and insights into the economic performance and stability of Luxembourg. This service provides important information and predictions about key economic indicators, industry trends, and possible risks and opportunities. By leveraging advanced economic models and methodologies, this service assists businesses, investors, and policymakers in making informed decisions and strategies for navigating the dynamic economic landscape of Luxembourg.