## Luxembourg: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Luxembourg

_IMF Staff Country Reports, May 24, 2023_

## Source details

**Canonical URL:** [Luxembourg: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Luxembourg](https://www.imf.org/en/publications/cr/issues/2023/05/23/luxembourg-2023-article-iv-consultation-press-release-staff-report-and-statement-by-the-533671)

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## Bibliographic details
- Published: May 24, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400242212.002

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### Executive summary and outlook
- Luxembourg has shown resilience in the aftermath of the war in Ukraine and accelerated tightening of global financial conditions, partly helped by fiscal support.
- Growth is expected to slow to about 1 percent in 2023, before gradually recovering to its potential percent over the medium term.
- Headline inflation is likely to moderate further but core inflation is expected to remain persistent.
- The near-term outlook is highly uncertain.

### Inflation and wage indexation
- Policy measures, although costly, have helped temporarily keeping inflation below the levels in most euro area peers and limiting the number of wage indexations.
- Core inflation is expected to remain persistent even as headline inflation moderates.

### Financial sector conditions and vulnerabilities
- Tighter financial conditions have started to affect the financial sector, with heterogeneity across segments.
- The financial sector, overall, remains resilient.
- Pockets of vulnerabilities are identified, especially in the real estate sector and non-bank financial institutions.

### Risks
- Risks are tilted to the downside and stem from:
  - a deeper global slowdown,
  - a de anchoring of inflation expectations,
  - systemic financial instability at the global level.

### Subject focus and keywords
- Subject: Energy prices, Financial institutions, Inflation, International organization, Labor, Loans, Monetary policy, Mutual funds, Prices, Wage indexation
- Keywords: central bank of Luxembourg, Energy prices, Europe, Global, Inflation, liability positions vis-a-vis nonresident, Loans, Luxembourg economy, money market rate, Mutual funds, policy advice, Wage indexation

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_Source: https://www.imf.org/en/publications/cr/issues/2023/05/23/luxembourg-2023-article-iv-consultation-press-release-staff-report-and-statement-by-the-533671_