PwC/AGEFI Monthly Barometer - November 2017

A drop in morale among Luxembourg manufacturers and Eurozone investors has led to our barometer falling. This time by eight points, to settle at +15.


Locally, STATEC lowered GDP figures substantially. 2015 growth has been revised down from 4% to 2.9%, and 2016 from 4.2% to 3.1%. While GDP rebounded by 0.6% in the second quarter of 2017, the rise remains modest when compared to last year’s extraordinary 2.4% jump. The slight revival is primarily linked to the increased added value of financial activities, information and communication services, and construction. GDP remained at 3% through the entire first quarter of 2017, in line with the 2015 and 2016 trends. Consumer confidence remains high in the Duchy, thanks both to a relatively dynamic employment market and salary increases, up 3.4% and 3.8% respectively over one year. Car sales recorded a 7% year-on-year increase in the third quarter and real-estate transactions rose by a staggering 14%, while inflation grew by 1.8% over the same quarter.

Regionally, despite a decrease in confidence in the Eurozone, the level remains relatively high. GDP grew by 0.6% in the third quarter, following an unexpected 0.7% in the second quarter. Unemployment - currently standing at 8.9% - continues its downwards march. And the Euro Stoxx index rose by approximately 3% following the ECB meeting on 26 October. At the meeting, the ECB announced that it will half its bond purchases as from January 2018. Furthermore, the bank did not announce an end date for the programme, which gives it the option of increasing purchases again if the outlook turns pessimistic. Additionally, the ECB did not comment on when it may raise rates again. This cautiousness seems to confirm that the monetary tightening process will be a long one, especially as inflation is expected to remain low, reaching 1.2% in 2018 and 1.5% in 2019. Nevertheless, the gradual recovery in oil prices could point to inflation growing again in the coming months, especially if the dollar continues appreciating against the single currency.

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