Luxembourg’s economy has officially entered into recession, however, experts do not expect it to continue into Q3.
According to a report published on Wednesday by Statec, GDP in Luxembourg fell 7.2% in the second quarter of 2020 (-7.8% over one year) largely as a consequence of measures related to the covid-19 pandemic. It follows a decline observed at the end of the first quarter, when GDP fell 1.4% compared to Q4 of 2019.
“While indeed marked, this recession also seems very time-bound,” the report author writes. “This is not expected to last into Q3, when a quasi-automatic rally is expected following the lifting of lockdown measures. Numerous economic indicators, such as the results of business and household surveys, reached a low point in March-April and have since recovered significantly.”
Luxembourg fared better than the euro area where GDP fell 3.7% during Q1 and 11.8% in Q2. The report suggested Statec’s forecast 6% drop in GDP for 2020 was overly pessimistic. “While, at present, Luxembourg appears to be one of the euro area countries least affected by this crisis, it must be borne in mind that the results for Luxembourg GDP in Q2 2020 remain largely based on estimates and are therefore subject to change.”