Luxembourg had an average annual GDP growth of 5% from 1999 to 2007. However, it entered recession and its GDP fell 1.3% during 2008. The recession worsened in 2009, when the economy contracted by 4.4%. Its subsequent recovery was cut short by the eurozone crisis which dragged the economy back into recession in 2012. That year’s 0.4% GDP contraction was followed by robust GDP growth of 4% in 2013, 5.6% in 2014, and 4% in 2015.
In 2017 “The national and European indicators continued to send out very positive signals,” according to STATEC. The EC forecasts that the tax reform will significantly improve households’ disposable incomes and purchasing power this year, causing a rebound in domestic demand.
The legacy of the recession years is relatively high unemployment. In March 2017, Luxembourg’s unemployment rate was 6%, down from 6.5% in March 2016, according to STATEC. Unemployment is expected to decline further. “The buoyant economic environment will support job creation, which is projected to remain robust both in 2017 and 2018,” according to STATEC.
In April 2017, annual inflation was at 1.9%, up from 1.8% in March and from 0.07% the same month last year. The EC predicts that this year’s inflation will be close to 2% due to the recovery of oil prices and other domestic factors.