Fitch reaffirms Luxembourg's "AAA" rating

The rating agency Fitch has just confirmed this Friday, after the markets closed, the "AAA" credit rating of the Grand Duchy of Luxembourg with stable outlook. This improved rating reflects the Grand Duchy's good governance indicators, strong public finances and the country's economic resilience despite the current uncertain economic environment.

As a result of the economic slowdown in Europe, the agency expects GDP growth in Luxembourg to fall from 2% in 2022 to 1.5% in 2023. Fitch believes that thanks to the support measures ("Energiedësch", "Solidaritéitspak" 1 and 2) implemented by the government in 2022, purchasing power, private consumption and the level of investment will continue to develop favourably.

The agency also notes that inflation has continued its downward trend and expects 3.9% in 2023 and 2.4% in 2024 respectively, and notes a slowdown in the evolution of housing prices.

However, the analysis highlights a number of downside risks for Luxembourg as an open economy, including weaker-than-expected growth in Europe and a possible rise in energy prices.

In this context, the agency notes that Luxembourg's prudent fiscal policy remains one of the key elements of its assessment. In this respect, Fitch expects the level of public debt to be maintained at all times below the 30% of GDP threshold set in the government programme.

The Minister of Finance Yuriko Backes commented: "The confirmation of the highest 'AAA' rating by Fitch is excellent news. This rating illustrates the resilience and performance of our economy, even in times of multiple crises. It testifies to the soundness of the government's responsible fiscal policy and the measures taken to strengthen household purchasing power and to support businesses."

Press release by the Ministry of Finance 

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