Luxembourg GDP Growth Slows to 0.6% in Q2

Luxembourg’s economy expanded 1.1% quarter-on-quarter in the three months to September 2025, from an upwardly revised 0.8% growth in the second quarter. This marked the strongest quarterly performance since the first quarter of 2024, amid a rebound in household consumption (1.2% vs -0.2% in Q2) and a further increase in government spending (1.3% vs 0.7%). At the same time, gross fixed capital formation jumped 12.1%, after a 2.6% decline in the previous period. However, net trade weighed on overall growth, as imports rose 1.9%, outpacing the 0.7% increase in exports. On an annual basis, GDP grew 2.7% in the third quarter, following an upwardly revised 0.7% fall in the prior quarter.

Luxembourg’s economy expanded 0.6% quarter-on-quarter in the second quarter of 2025, slightly easing from an upwardly revised 0.7% growth in the previous quarter. The growth was primarily driven by household consumption (0.2% vs -0.5%) and government spending (1.0% vs 1.3%), but was dragged down by a drop in gross fixed capital formation (-3.0% vs 3.0%). In external trade, exports remained flat (0.0% vs 5.8%), while lower imports (-0.1% vs 5.8%) slightly supported GDP. On an annual basis, GDP fell 0.2% in Q2, following a 1.9% decline in the prior quarter.

Luxembourg’s economy contracted by 1.0% quarter-on-quarter in the first quarter of 2025, marking a sharp reversal from a downwardly revised 1.3% expansion in the previous quarter. The contraction was primarily driven by declines in household consumption (-0.4% vs 0.4%) and exports (-0.4% vs 1.7%), alongside a sharp deceleration in import growth (0.1% vs 1.7%). In contrast, government spending accelerated (1.2% vs 0.9%). On an annual basis, GDP declined by 0.4% in Q1 2025, reversing a 1.9% expansion in the prior quarter.