PwC/AGEFI Monthly Barometer - April 2018

Our barometer has continued to drop in March. This time by seven points to reach +10, its lowest level since November 2016. Contrasting to a slight increase in confidence among Luxembourgish manufacturers, the ZEW index plunged from 29.3 to 13.4.


In Luxembourg, growth was absent from the last quarter of 2017. In fact, we had a near-stagnation of -0.1%. This means that, year-on-year, the economy only grew by 2.3%, equal to that of the Euro area. This provisional figure is well below STATEC’s latest forecast of 3.4%. This is largely explained by the contraction of the value added in terms of the volume of the financial sector, while employment in this sector grew by 2.8% in 2017. The Grand Duchy’s economic growth was the topic of debate during the recent Economy Day, jointly organized by PwC and the Chamber of Commerce. The consensus was that the Grand Duchy should move towards a qualitative growth model according to the Rifkin framework.

In the Eurozone, political uncertainties following the Italian elections and growing tensions between the West and Russia, have compounded investor’s fears. The stock market shocks in early February also had a significant impact. The EuroStoxx index fell 4.7% in Q1 2018, its worst performance since early 2016. The near-correction was principally related to inflationary pressure fears across the Atlantic, as well as protectionist threats brandished by both the US and China. Indeed, a trade war between these two powerhouses would inevitably have a major global impact. Finally, large tech companies are still uncertain about their fiscal treatment in Europe and the US.

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