Luxembourg‘s GDP ‘stalled’ in the final quarter of last year, according to Statistiques Luxembourg, as the year ended with economic growth of 0.6%.
This was ‘slightly better’ than in previous years, but still ‘weak compared to past performance’, the statistics body noted, adding that the global geopolitical situation and the spectre of further inflation have cast a shadow over the prospects for the coming year.
Luxembourg’s economy recorded a slight decline of 0.1% compared with the previous quarter. Growth during the year was uneven across sectors. Non-market activities, including public administration, education, and health, along with industry and business services, contributed positively to GDP.
Other market sectors, such as information and communication services, trade, transport, and financial activities, recorded declines in the final quarter. The decline in financial activities followed a sharp rebound in the previous quarter.
Household consumption
Household consumption remained dynamic, particularly in health, telecommunications, and catering services, although purchases of private vehicles declined. Investment expenditure fell by 11.5% in the fourth quarter, largely in response to a sharp rise in the previous quarter due to satellite acquisitions.
Total exports fell, driven mainly by non-financial services, while exports of financial services increased. Despite the low growth, the annual GDP increase of 0.6% marked an acceleration compared with 0.1% in 2023 and 0.4% in 2024, though it remained well below the decade average of 2.5%.
Employment
Employment in Luxembourg grew by 1.2% in 2025, slightly above the eurozone average of 0.7%. Growth was supported by non-market services and a smaller decline in construction. Employment in the trade, transport, hospitality, and ICT sectors weakened, with ICT employment declining for the first time since 2003.
Financial markets also showed mixed results. Assets of collective investment undertakings in Luxembourg increased by 6.5% in 2025, mainly due to net inflows into bond and money market funds. Net banking income was dampened by falling interest margins, resulting in a 5.4% decline in bank net profits.
The statistics body added that its forecast for 2026, of 1.7% growth, is likely to be revised downwards ‘given the deterioration of the international context’. Read more here.
