According to the Idea Foundation’s economic scoreboard, the ICT sector performed best in Q2 2024, with value added up 11.4% year-on-year. Photo: Shutterstock

According to the Idea Foundation’s economic scoreboard, the ICT sector performed best in Q2 2024, with value added up 11.4% year-on-year. Photo: Shutterstock

The Idea Foundation has published its economic and social scoreboard, highlighting data that reveal “a slow but tangible recovery.” Economic activity, the labour market, the social situation and the economic climate: the Luxembourg economy is showing some signs of improvement. But some sectors are faring better than others.

According to the data highlighted in an  published on 16 September 2024 by the Idea Foundation, the volume of total gross added value generated by economic activity in the country rose by 0.7% in Q2 2024 compared with Q2 2023. Gross value added (GVA) represents the wealth created by a company or a sector of activity. It is calculated by subtracting the value of intermediate consumption from total sales or production.

The ICT sector turned in the best performance, with a year-on-year increase in value added of +11.4% (+1.4% between the first and second quarters of 2024). This was due in particular to sustained demand for digital and technological services, especially in the areas of cloud, cybersecurity and outsourced IT services. These trends have contributed to increased productivity and investment in this key sector of the Luxembourg economy.

The second sector with the strongest year-on-year increase in GVA was public services (+5.2% year-on-year and +0.9% quarter-on-quarter). This can be explained by the increase in public spending and salary adjustments as part of wage indexation. In fact, the central government budget showed a surplus of €487m over the first half of the year, with revenues rising more dynamically (+12.2%) than expenditure (+7.3%).

Over the year as a whole, the industry’s gross value added also increased, by 2%, whereas it fell by 1% between the first and second quarters. However, the Idea Foundation notes that in this sector, “activity remains at a rather low level.” The sector expects sales prices to rise slightly. 1.1% of the bankruptcies recorded over a year (data to 8 July 2024) were in the industrial sector.

The entertainment and leisure sector also saw its gross value added increase over the year, albeit very slightly (+0.7%).

Construction and finance down

In contrast, all other sectors are down. The most striking decline was in construction (-6.7% year-on-year and -1.7% compared with Q1 2024). “The sector is anticipating lower sales prices,” says the Idea Foundation’s report. Over the year as a whole, 12.3% of insolvencies recorded were in this sector.

The financial services sector is following the same downward trend (-3% year-on-year, -0.2% quarter-on-quarter). “Over one year, most bankruptcies were in the financial services and insurance sector (34.6%),” notes the foundation.

These two declining sectors “continue to weigh on the country’s economic performance.”

This article was originally published in .

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