Granting the country the for its high income per capita and management of the pandemic crisis, Fitch maintained this score for 2023, stating that it was positive that the grand duchy would be able to keep public debt below 30% of the GDP. Staying below this threshold had been among the current state coalition’s agreement, The national council for public finances (CNFP) in November 2022 shared that the country and the 30% mark in 2027.

Fitch in its rating also predicted a slowdown in Luxembourg’s GDP growth--1.5% instead of the 2% witnessed in 2022--but added that the Solidaritéitspak voted during the tripartite meetings in 2022 would protect purchasing power, private consumption and keep investments growing. Inflation is also set to slow down and should stand at 3.9% in 2023 and 2.4% in 2024, according to the agency. Real estate prices should also witness a slowdown. 

“The confirmation of the highest ‘AAA’ rating by Fitch is excellent news,” commented finance minister Yuriko Backes (DP) in a press release. “This rating illustrates the resilience and performance of our economy, even in these times of polycrisis. It testifies to the soundness of the government's responsible fiscal policy and the measures taken to strengthen household purchasing power and to support businesses."

However, the credit rating agency noted that Luxembourg’s position as an “open economy” could place it at risk in the context of potentially rising energy prices and a European Union demonstrating a slighter growth than expected. 

Generally speaking, a higher credit rating leads to lower borrowing costs on the capital markets.