Luxembourg economy is recovering despite crises

The Luxembourg economy is recovering again, but the ongoing trade war under the presidency of Donald Trump Could « put the delicate recovery thwart ». This is explained by the Fondation Idea, an initiative of the Chamber of Commerce Avis Annuel Lud – under the motto « Déboussolés! ».

« In this uncertain global environment, the Luxembourg economy gradually recovers after a turbulent phase and again records growth of one percent. Nevertheless, the shock triggered by the war in Ukraine continues to put up the economic activity – even more than the Covid pandemic, explains the organization in a press release. And then there would also be US President Trump and his tariffs.

The annual report of the IDEA focuses on various topics. The labor market dynamics after pandemic and the country’s progress in the climate and energy transition.

Different developments are emerging within the individual industry. So the economic output decreased in construction and trade last year. Sectors with increasing added value, on the other hand, were industry, the hotel and restaurant industry, the service industry and the energy and traffic sector. Health, education and public administration also observed growth.

Numerous state support packages and measures to maintain purchasing power have created important macroeconomic buffers, but the prospect of a trade war could affect recovery.

Wirkind construction industry

According to Idea, the creation of jobs last year slowed down. With only 1.1 percent, this corresponds to the lowest growth rate of employment since 2009. In the commercial sector in particular, a break -in of employment growth with only 1,300 newly created jobs has been recorded; Compared to 4,450 in the non -commercial sector.

The construction industry as a crisis sector had to accept a loss of 2,475 jobs. In finance and insurance, growth slowed down compared to previous annual changes; 1.3 percent in 2024 compared to 2.9 percent in 2023.

The Luxembourg job market continues to record rising Unemployment figures. At the end of February 2025, 19,460 job seekers with residence in Luxembourg were registered with Adem. That is 7.1 percent more than in the previous year. According to Idea, there is the biggest increase in unemployed with a university degree. This number rose by more than 15 percent between February 2024 and February 2025.

Intensify climate efforts

The Luxembourg government pursues the National Energy and Climate Plan clear goals. By 2030, greenhouse gas emissions are expected to drop by 55 percent compared to 2005 and half of all cars drive electrically on the streets. The IDEA summarizes « unequal efforts » in this area. The traffic sector has reduced its emissions by 43 percent since 2005, the energy industry, the manufacturing trade and the construction industry by 24 percent and building industry by 16 percent.

« To achieve the goals, the effort must be reinforced, » emphasizes the organization. Almost six percent reduction per year will be expected by 2030. Before that, this value was 3.4 percent. The decarbonization of traffic in particular is crucial, after all, these 60 percent of the total emissions in the country make up.

It is positive that the installed capacities for wind power and photovoltaics increase (plus 3.0 percent and plus 25 percent in 2024), but according to Idea, they remain far behind the destinations for 2030. These are currently 47 percent for wind power and 40 percent in solar energy. As a result, new measures to accelerate the transition are expected, the fondation sums up.