In the spring, it looked as if the European economy was picking up speed again, but since the beginning of the summer, companies have been facing a lot of headwinds again.
What the statistics office Statec has found is interesting: In the second quarter, Spain contributed almost 30 percent to growth in the eurozone, although its GDP only accounts for around ten percent of the economic output of the monetary union. On the other hand, Luxembourg’s main trading partner is Germany, where GDP shrank again in the second quarter. The largest economy in the eurozone is suffering from low investment and weak industrial production.
In Luxembourg, the indicators deteriorated again in July after having tended to recover in the first half of the year. “Only the construction industry in Luxembourg has been somewhat more optimistic in recent months,” notes Statec.
As for oil and gas prices, they have been relatively stable since mid-2023, despite ongoing geopolitical tensions in Ukraine and the Middle East. According to Statec, Europe has been able to reduce its Russian gas imports by more than 70 percent compared to 2021. “With a level of almost 90 percent, stocks are well supplied in view of the approaching autumn,” says the statistics office’s economic report.
The price of oil remained in a range of $70 to $90 per barrel despite unrest in the Middle East and attempts by OPEC+ to cut production in order to raise prices. “This decline in OPEC+ supply was more than offset by production increases in the US, Canada, Brazil and Guyana,” explains Statec.
More passengers at Findel, fewer car registrations
The number of air passengers continued to increase and exceeded pre-pandemic levels in Luxembourg in 2023, in contrast to its neighbouring countries, while in the first seven months of 2024 passenger numbers at Findel were about eight per cent higher than in the previous year and are expected to exceed the 5 million mark this year, which corresponds to a doubling within ten years.
In terms of air freight, Luxembourg Airport has seen a slight upward trend since the beginning of 2024 and recorded an increase of around three percent in the first seven months compared to the previous year.
In the first half of 2024 as a whole, car sales in the eurozone recorded a year-on-year increase of four percent. Not in Luxembourg, where they fell by around five percent compared to the first half of 2023.
In the case of commercial vehicles, Luxembourg registrations in the first half of the year were also far behind the European trend: minus 30 percent year-on-year for vans compared to plus 15 percent in the EU, minus 40 percent for trucks compared to plus three percent in the EU. “Only the registrations of buses do not suffer from the comparison,” says Statec: plus 42 percent in Luxembourg compared to plus 30 percent in the EU.
Granting of real estate loans increases
According to the bank lending survey, applications for real estate loans in Luxembourg have increased in the last two quarters after declining for almost three years. At the same time, the proportion of applications rejected has fallen. In the eurozone, too, banks are reporting a recovery in the number of applications and, as in the Grand Duchy, expect this trend to continue in the third quarter.
This reflects the turnaround previously observed in real estate transactions.
Stat
Economic flash August 2024
The total amount of loans granted for residential real estate in Luxembourg rose by nine percent year-on-year in the second quarter. “This increase is entirely due to mortgage loans to non-developers,” explains Statec. The seasonally adjusted data show that the low point in real estate loans granted to non-developers was reached in the fourth quarter of 2023 and that they have been recovering since then. “This reflects the turnaround previously observed in real estate transactions.” The number of real estate purchases in Luxembourg rose in the spring for the first time in two years. Sales of existing apartments were 25 percent higher than the previous quarter.
While employment of cross-border commuters rose by four percent in 2022 compared to the previous year, last year it was only an increase of 2.2 percent, “as cross-border commuter employment is more sensitive to economic fluctuations,” according to the Statec analysis. The growth of French cross-border commuters remained slightly below the average of the last decade, while the growth rate for nationals from Germany and Belgium has more than halved. Cross-border commuters remained slightly dominant in the new jobs created last year (51 percent).
