Luxembourg Economy Stable

Fitch has maintained its AAA rating for Luxembourg and said the country’s economic outlook remains stable, echoing similar assessments made recently by DBRS, Moody’s and Standard & Poor’s, AFP reported. Fitch cited the Grand Duchy’s “strong” governance metrics, high income per capita and “solid” growth potential and public finances. It said the virtues of the economy had largely offset high structural unemployment and a continuing reliance on financial services. On the latter point, it warned that a “severe sudden contraction of financial-sector activity in Luxembourg could have adverse consequences for the real economy, negatively impacting labor market conditions and public finances”. Fitch said public finances were a “key strength” for Luxembourg, “with a five-year average fiscal surplus of 1.2% of GDP compared with a 0.3% of GDP deficit for the AAA median”. The Grand Duchy has the lowest public-debt-to-GDP ratio for all countries rated AAA by Fitch, at 20.6%. Luxembourg’s statistics body, STATEC, estimates the economy’s potential growth at 3.2%.