In the eurozone, GDP grew by 0.3% in the first quarter. This sign of recovery “appears to be an almost generalised trend in all member states,” notes Statec, Luxembourg’s statistics bureau, in its monthly report. Another positive factor is the easing of fixed rates and the stabilisation of variable rates. In March, the average rate applied to new variable-rate mortgages was 4.9% (+1.2 percentage points over one year), notes the report, while that for fixed-rate mortgages was only 3.7% (-0.3 percentage points).

But other signals are less positive. In the construction sector, Statec highlights “reduced visibility.” In Luxembourg, the duration of business activity has been falling sharply since mid-2022, meaning that there are fewer and fewer new projects and that order books aren’t filling up. In April, more than 50% of construction companies in Luxembourg reported insufficient demand, “far more” than in neighbouring countries and in the eurozone. “This is having repercussions on the sector’s employment prospects, which continue to deteriorate (while they appear to have bottomed out in the eurozone).” Recruitment in this sector is expected to fall by 16% by 2023.

Car sales are also considered to be a good indicator of the economic climate, as they give an idea of consumer confidence. They are often financed by loans, and also reflect households’ ability and willingness to spend money. In Luxembourg, car sales were running low on gas in early 2024, after rising by 16.8% in 2023. According to the European Automobile Manufacturers Association, one of the reasons for this is the reduction in subsidies for electric cars in Germany and France. In Luxembourg, however, these subsidies are still in force until the end of June. For their part, dealers are citing “a wait-and-see attitude” on the part of consumers before switching to electric cars.

Finally, in the financial sector, the market share for Luxembourg funds has fallen. In 2023, investment funds domiciled in the grand duchy were unable to make up the ground lost in 2022. Their assets grew by 5% in 2023, after falling by 14% the previous year. “While Luxembourg continues to account for the majority of the assets of investment funds managed in Europe, its market share has fallen slightly since 2021 (-1 percentage point),” writes Statec, also pointing out that the last two years have been characterised by negative net asset issuance, meaning that redemptions have exceeded issuance. Meanwhile, other countries are doing well: Ireland has increased its market share the most (+1.2 percentage points since 2021), followed by France (+0.8 points), Switzerland, Italy, Turkey and Spain (+0.2 points) and Liechtenstein (+0.3 points).

This article in Paperjam. It has been translated and edited for Delano.