Luxembourg to feel global economic slowdown in 2020
Employment is forecast to slow while household consumption stays strong
Trade wars roiling the global economy, Germany’s slowdown and consequent economic uncertainty will hit Luxembourg in 2020, the country’s statistics institute said Tuesday.
Though household consumption and investment spending are expected to remain strong next year, the multiplying negative signals suggest a weakening environment in Luxembourg, with jobs and tax revenues growing at a diminished rate in 2020, said the National Institute of Statistics and Economic Studies, or STATEC.
“The cyclical slowdown, which was reflected in the weakening of the GDP growth rate in the euro zone at the beginning of 2018, is now being felt in both European and Luxembourg labour markets,” STATEC said.
“With no sign of significant recovery emerging as 2020 approaches, euro area growth is expected to remain weak next year” as governments provide little additional stimulus.
Employment in Luxembourg should grow at about 3.2% next year, down from 3.7% this year, the agency said. Unemployment should remain steady at about 5.3%, still higher than the average of 4.4% the country experienced between 1995 and 2018, STATEC said.
Wages are expected to grow by another 2.6% in 2020, about the same as this year, the agency said. That’s down from 3.3% average pay raises seen over the previous 23 years, the data agency said.
The expanding economic slowdown is expected to affect corporate tax collections, cutting public receipts from a 7% increase this year to 3% in 2020, the institute said. Public spending is expected to remain on the same rapid growth rate in 2020 as the past three years.
The government surplus is expected to fall sharply to 1.3% of GDP next year, down from 2.8% in 2019, the institute said.
The European Commission, the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund have all predicted slower growth for Luxembourg next year.