In April 2023, the latest available data, Luxembourg witnessed a year-on-year decline of -3.2% in exports and -11.2% in imports, values last seen during the trade restrictions imposed due to the pandemic in 2020.
The decrease in exports can be primarily attributed to a significant drop in the steel industry (-23.5% compared to April 2022) and the chemical industry (-14.9%), which collectively contribute to nearly one third of total goods exports.
Concerning imports, the decline can be attributed to reduced trade in intermediate consumption within the steel industry (-34.9%), the chemical industry (-18%) and the machinery and equipment (-18.9%). These sectors accounted for 38.5% of the total imports of goods in Luxembourg.
Interestingly, the decline in imports outpaced the decline in exports, leading to an improvement in the net deficit of €591.3m compared to previous months.
The ‘trendline’, as computed by Statec, highlights a clearer decline in export and import volumes in past months.
Similar declines were observed during the 2008-2009 financial crisis and the pandemic in 2020, indicating that an economic downturn may be underway.
In terms of destinations, exports in April to neighbouring countries experienced significant year-on-year drops of -10.2% to Belgium, -8.5% to France, and -6.4% to Germany, representing over half of the total export goods trade volume.
Imports from these countries also saw declines, with Belgium experiencing the highest decrease at -12.8%, followed by Germany at -6.7%, and France at -5.8%.
A representative from Luxembourg’s central bank declined to comment on the underlying reasons for the decline, while a Statec representative indicated that since the energy sector experienced very high prices in 2022, which have decreased in 2023, the cumulative effect of price decreases and a slight decrease in volume are likely factors contributing to the decline. Although, further analysis is required to gain a deeper understanding of the situation, the Statec spokesperson stated.