Luxembourg Public Debt (% of GDP)

Public Debt in Luxembourg

After declining in Q4, annual economic growth should have rebounded in Q1. In January–March, both consumer and business sentiment improved from Q4’s average. Moreover, receding inflation, increased employment and accelerating retail sales growth suggest improving private spending in the quarter. That said, annual industrial output contracted by 6.8% in the quarter—its weakest performance since Q3 2020. The decline was driven by lower output in energy and raw-material-intensive sectors, such as electricity generation, construction and textiles. In addition, increasing interest rates started to dampen activity: Real estate loans decreased by 35% year on year in Q1. In Q2, economic growth is likely cooling: Consumer and business sentiment plummeted in April from their Q1 values, hinting at weaker consumption and investment prospects.