A scene on Kirchberg, one of Luxembourg's main business districts
Photo: Matic Zorman/archives
Employment in Luxembourg is decelerating, while the unemployment rate remains stagnant: the economic slowdown in Europe is starting to be visible in the grand duchy, says Statec.
In its monthly conjuncture flash, which looks at the state of the Luxembourg economy as a part of the euro zone, Statec explains that at the end of 2019, while business services remained the main drivers of employment, they nevertheless also experienced the most marked slowdown, along with the financial sector. While the latter is seeing a slowdown in the management of investment and pension funds as well as financial holding companies, it still witnessed a 3.1% growth in Q4 2019. Nevertheless, some 550 redundancies recently announced in the banking sector should take effect in the months to come.
Industry saw a modest growth of 0.8% in 2019 (compared to 1.6% growth in 2018), but commerce and the public sector were, according to Statec, the only branches to see an acceleration in job creation last year.
It its winter 2020 forecast (published 13 February), the European Commission cited the coronavirus as a downside risk. “The baseline assumption is that the outbreak peaks in the first quarter, with relatively limited global spillovers,” it stated. “The longer it lasts, however, the higher the likelihood of knock-on effects on economic sentiment and global financing conditions.”
The Commission nevertheless forecast euro area growth of GDP to be 1.2% in 2020, but Statec’s report on Wednesday states that the spread of the outbreak could lead to a more pessimistic scenario, adding that Oxford Economics is forecasting growth to be around 0.8% for the same timeframe.
The aforementioned financial sector evolution is partly driven by Brexit relocations, says Statec.
Moreover, the volume of non-life insurance companies nearly tripled over one year, a result in part to 11 companies relocating to the grand duchy.